PRECIOUS-Gold heads for fourth weekly drop as traders reassess Fed rate outlook

* All precious metals head for weekly loss

* Sustained break below $4,000 could see bears test $3,886, analyst says

* Traders see 61% chance of a September rate hike - CME FedWatch (Rewrites for EMEA morning hours)

By Sumit Saha

June 26 (Reuters) - Gold prices gained on Friday as recent U.S. inflation data weighed on the dollar and led markets to slightly trim rate-hike bets.

However, the bullion stayed on course for a fourth straight weekly fall, having slipped to a more than seven-month low earlier this week.

Spot gold was up 0.3% at $4,038.48 an ounce as of 0914 GMT. U.S. gold futures for August delivery rose 0.2% to $4,053.80/oz.

Bullion slipped below the $4,000-mark on Wednesday for the first time since November 2025 and is set for a weekly loss of about 2.5% as the dollar climbed to its strongest level in over a year on the same day.

Gold is trading near $4,000 for a third consecutive session, with investor sentiment still shaken by the recent sell-off as markets adjust to the twin headwinds of a hawkish Fed and a stronger dollar, Saxo Bank analyst Ole Hansen said.

The U.S. dollar held near recent highs despite a modest dip after the release of the Fed's preferred inflation gauge on Thursday led markets to slightly scale back Fed rate-hike expectations.

Markets still expect three Federal Reserve rate hikes this year, with CME FedWatch showing a roughly 61% chance of a September increase, down from 69% before the U.S. personal consumption expenditure data.

"While the technical breakdown continues to weigh on sentiment, continued declines in energy prices and softer bond yields may eventually reduce pressure on the Federal Reserve to tighten policy further, potentially offering some support to the precious metal," added Hansen.

Crude prices have fallen more than 2% as supply concerns ease following the exit of more stranded oil tankers through the Strait of Hormuz.

A sustained break below $4,000 could see bears test $3,886 support, while a bearish "death cross" may reinforce downside momentum, leaving prices vulnerable to the $3,600-$3,700 range in the months ahead, said Han Tan, chief market analyst at Bybit.

Among other metals, spot silver lost 0.01% to $57.86 per ounce, platinum gained 0.7% to $1,612.62, and palladium rose nearly 2% to $1,207.96. All metals were headed for a weekly loss. (Reporting by Sumit Saha in Bengaluru; additional reporting by Swati Verma; Editing by Janane Venkatraman)