PRECIOUS-Gold on track for second weekly loss as rising oil prices drive up rate hike bets

(Updates for US mid-session trade)

* Gold falls 1%

* 58% chance of at least one US rate hike by 2026-end

* US consumer sentiment plunges to record low

By Ishaan Arora

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

Spot gold was down 0.9% at $4,502.59 per ounce, by 1457 GMT, after falling 1% earlier in the session. It is down 0.8% for the week. U.S. gold futures for June delivery lost 0.9% to $4,502.70.

"Market participants are a bit like a rabbit in the headlights, fixed upon Hormuz and by association, disrupted supply chains across the board, which in turn is leading to inflationary fears and concerns about potential interest rate rises," said StoneX analyst Rhona O'Connell, referring to the Strait of Hormuz oil shipping channel. Oil prices climbed as investors doubted U.S.-Iran peace talks would yield any breakthrough, while the dollar held near a six-week high, making dollar-priced bullion more expensive for holders of other currencies.

Benchmark U.S. 10-year Treasury yields pared earlier losses to hover near more than one-year highs, sapping demand for the non-yielding yellow metal.

Soaring energy costs 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. Fed Governor Christopher Waller, who until recently had advocated for lower rates, said the central bank should axe the "easing bias" and effectively open the door to a possible rate hike. Elsewhere, U.S. consumer sentiment plumbed a record low in May as surging gasoline prices fueled anxiety over worsening affordability, a survey showed Friday.

Spot silver fell 1.9% to $75.28 per ounce, platinum lost 2.5% to $1,916.62 and palladium fell 2.1% to $1,349.30. All the metals were on course for weekly losses. (Reporting by Ishaan Arora in Bengaluru; Editing by Barbara Lewis, Rod Nickel)