* Trump says US and Iran could sign peace deal soon

* US producer prices increase more than expected in May

* Silver and platinum set for weekly loss, palladium heads

for gain

(Updates prices as of 0442 GMT)

By Pablo Sinha

June 12 (Reuters) - Gold prices fell on Friday and were on

track for a weekly loss, pressured by concerns around inflation

and potential U.S. Federal Reserve interest rate hikes.

Spot gold was down 0.5% at $4,193.58 per ounce, as of

0442 GMT, and was set for a weekly loss of 3.1%. U.S. gold

futures for August delivery rose 2.5% to $4,215.30.

Gold fell to a more than six-month low on Thursday before

closing higher at $4,219.69, as U.S. President Donald Trump

called off planned military strikes on Iran and signalled an

imminent peace deal.

The price is "completely being driven by the geopolitical

headlines," said Edward Meir, an analyst at Marex.

"The markets will be paying attention to any signal that the

Fed could raise rates, and if they hint at moving in that

direction, I think gold could probably break below the $4,000

mark."

Gold has lost about 20% since the Iran war began, on fears

that rising energy costs could spur inflation, prompting central

banks to keep interest rates higher and raising the opportunity

cost of holding the non-yielding metal.

U.S. producer prices increased more than expected in May,

leading to the largest annual gain in 3-1/2 years as the Middle

East conflict drove up the cost of energy products.

Traders are currently pricing in a 60% chance of a U.S. rate

hike in December, according to the CME Group's FedWatch tool.

Donald Trump on Thursday said the United States and Iran

could sign a peace deal as soon as this weekend that would

reopen the Strait of Hormuz to shipping, but Iran countered that

it had not reached a final decision on an agreement.

Meanwhile, holdings of the largest gold-backed

exchange-traded fund (ETF), New York's SPDR Gold Trust,

fell about 0.3% to 923.89 metric tons on Wednesday.

ANZ lowered its year-end price target for gold by $400 to

$5,200 to reflect recent price volatility.

Spot silver fell 0.5% to $67.03 per ounce, and

platinum gained 0.7% to $1,731.41, with both metals

headed for a weekly loss. Palladium rose 1.8% to

$1,292.20, and has gained about 5% for the week so far.

(Reporting by Pablo Sinha in Bengaluru; Editing by Rashmi Aich,

Mrigank Dhaniwala and Subhranshu Sahu)