June 5 (Reuters) - Gold prices edged lower on Friday, and were set for a weekly loss, as tensions in the Middle East dampened hopes for a U.S.-Iran peace deal amid rising inflation and rate-hike fears.

FUNDAMENTALS

* Spot gold XAU= was down 0.3% to $4,462.22 per ounce, as of 0049 GMT. It has fallen about 1.6% for the week so far.

* U.S. gold futures GCcv1 for August delivery fell 0.4% to $4,489.

* The Iran-backed Hezbollah militia rejected a new ceasefire in Lebanon and Israel said it would not withdraw troops from the country, undermining U.S. President Donald Trump's efforts to halt fighting there to forge peace with Tehran.

* Kansas City Federal Reserve President Jeffrey Schmid said on Thursday that the U.S. central bank's choice now is between being patient and holding interest rates steady or hiking rates to tamp down inflation that has been above target for years.

* Meanwhile, San Francisco Fed President Mary Daly said the U.S. interest-rate path will depend on how the economy evolves, adding that monetary policy is "in a good place" and the Fed is prepared to respond "either way."

* While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

* Investors are now awaiting the May U.S. nonfarm payrolls data, due later in the day, to gauge the Fed's monetary policy path.

* India's physically backed gold exchange-traded funds (ETFs) recorded their first net monthly outflow in a year in May, as investors booked profits following a sharp rise in prices triggered by higher import duties, data showed on Thursday.

* Physical investment is set to replace jewellery as the largest component of gold demand for the first time this year due to double-digit losses in jewellery amid high prices, consultancy Metals Focus said in its annual report.

* Spot silver XAG= fell 0.6% to $73.45 per ounce, platinum XPT= dropped 1.3% to $1,876.58, and palladium XPD= slid 1.5% to $1,301.25. All metals were headed for a weekly loss.

DATA/EVENTS (GMT)
0900	EU GDP Revised QQ, YY Q1
1230	US Non-Farm Payrolls May
1230	US Unemployment Rate May
1230	US Average Earnings YY May