June 5 (Reuters) - Gold prices edged lower on Friday and were on track for a weekly loss after Middle East tensions dampened hopes for a U.S.-Iran peace deal, amid rising inflation and concerns about higher interest rates.

Gold fell 0.3 percent to $4,462.22 an ounce in spot trading by 0049 GMT. It is down about 1.6 percent so far this week.

U.S. gold futures for August delivery fell 0.4 percent to $4,489.

The Iranian-backed Hezbollah group rejected a new ceasefire in Lebanon, and Israel said it would not withdraw its forces from the country, undermining US President Donald Trump's efforts to halt the fighting there as part of his push for a peace deal with Tehran.

Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, said on Thursday that the U.S. central bank now has a choice: either to be patient and keep interest rates steady or to raise them to curb inflation.

While gold is seen as a hedge against inflation, rising interest rates usually have a negative impact on the non-yielding metal.

Investors are now awaiting the U.S. non-farm payrolls data for May, due later today, to assess the Federal Reserve's (the U.S. central bank) monetary policy path.

As for other precious metals, silver fell 0.6 percent to $73.45 an ounce in spot trading, platinum dropped 1.3 percent to $1,876.58, and palladium declined 1.5 percent to $1,301.25. All three metals are on track for weekly losses.