* Gold gains over 1%, set for weekly loss of 1.4%

* Trump extends pause in attacks on Iran's power plants

* US troop buildup continues in Middle East

* Turkish gold reserves in largest drop in 7 years

(Updates for EMEA session trade)

By Ishaan Arora

March 27 (Reuters) - Gold rose on Friday on bargain-hunting but remained on track for a

fourth straight weekly loss, as the U.S.-Israel war with Iran stoked inflation concerns, lifted

the dollar and reinforced expectations of higher interest rates.

Spot gold rose 1.1% to $4,425.39 per ounce as of 1018 GMT. Gold was set for a weekly

loss of 1.4% so far having touched a four-month low of $4,097.99 on Monday. U.S. gold futures

for April delivery gained 1% to $4,421.30.

"The initial knee-jerk liquidity needs have been met, and now gold is able to perform," said

Nitesh Shah, commodity strategist at WisdomTree. "Savvy investors have been using the dip in

prices as an opportunity to build."

Brent crude rose to nearly $110 a barrel, even as U.S. President Donald Trump extended a

pause in attacks on Iran's energy plants for 10 days.

The U.S. has also sent thousands of troops to the Middle East, with Trump weighing whether

to use ground forces to seize Iran's strategic oil hub of Kharg Island.

Since the war began, oil prices have surged, fuelling inflation concerns that would

typically support bullion as an inflation hedge. However, higher interest rates tend to weigh on

non-yielding gold.

Traders have priced out any chance of U.S. rate cuts in 2026 and see a 40% chance of a rate

hike by year-end, per CME Group's FedWatch Tool. The market was expecting two cuts before the

war began.

"Bullion is trying to rebound after the recent selloff, but it is clear that we will remain

in volatile territory until there is more clarity about the U.S.-Iran situation," said

Swissquote analyst Carlo Alberto De Casa.

Softer bullion prices attracted some buying in India this week, though many held off in

anticipation of a further price drop.

Meanwhile, the Turkish Central Bank's gold reserves posted their largest weekly drop since

August 2018 amid fallout from the Iran war.

Spot silver rose 1.1% to $68.74 per ounce. Spot platinum gained 2.5% to

$1,872.87, while palladium rose 1.7% to $1,376.66.