PRECIOUS-Gold on track for second weekly loss as rising oil drives rate hike bets

(Updates for U.S. trade)

* U.S. dollar holds near six-week high

* CME FedWatch predicts 58% chance of at least one U.S. rate hike this year

* Trump to swear in Warsh as Fed chair later in the day

* Price volatility subdues Indian demand

By Ishaan Arora

May 22 (Reuters) - Gold on Friday headed for its second straight weekly loss, pulled lower by a firmer dollar and rising oil prices that kept inflation concerns in focus and increased bets for a U.S. interest rate hike.

Spot gold fell 0.5% to $4,519.69 per ounce, by 1255 GMT. It is down 0.4% so far in the week. U.S. gold futures for June delivery lost 0.5% to $4,520.90.

"Gold is still very much on the defensive. Critically, it's still holding support at $4,500 on a technical basis so that's keeping the downside somewhat in check. The upside is limited, though, with the stronger dollar and rising oil capping gains," said Edward Meir, an analyst at Marex. Oil prices climbed as investors doubted U.S.-Iran peace talks would yield any breakthrough. The dollar held near a six-week high, making dollar-priced bullion more expensive for holders of other currencies.

High energy prices tend to drive up inflation and could prompt central banks to keep interest rates higher for longer, which weakens demand for non-yielding bullion, even though it can be an inflation hedge.

Traders have priced in a 58% chance of at least one 25 basis-point U.S. Federal Reserve interest rate hike by December, according to CME Group's FedWatch tool.

"If (oil prices) remain supported at these levels for much longer, inflation concerns are likely to stay elevated. In that case, we could see bond yields push higher again, which in turn could weigh on precious metals," said Fawad Razaqzada, market analyst at City Index.

Benchmark 10-year U.S. Treasury yields dipped but hovered near one-year highs. Later on Friday, U.S. President Donald Trump will swear in Kevin Warsh as Fed chair, the administration said.

In India, gold traded at a steep discount this week as price volatility eroded demand. Premiums also eased in China.

Spot silver fell 1.2% to $75.77 per ounce, platinum lost 1.8% to $1,930.33 and palladium fell 1.5% to $1,358.26. All the metals were on course for weekly losses. (Reporting by Ishaan Arora in Bengaluru; Editing by Barbara Lewis)