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Gold heads for weekly dip as hawkish cenbanks dull appeal

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Gold fell on Friday en route to a third

straight weekly dip as a firm dollar and looming rate hikes

soured appetite for the non-yielding asset, while India’s import

tax hike on bullion also dampened its demand prospects.

Spot gold was down 0.4% at $1,800.50 per ounce by

1500 GMT, and fell 1.4% for the week. U.S. gold futures

dipped 0.2% to $1,803.70.

“The dollar is the biggest factor pressuring gold, with the

bigger picture being rising interest rates,” said Chris Gaffney,

president of world markets at TIAA Bank.

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Investors also seemed to prefer the safety of the dollar

amid growing recession fears on Friday, with the currency’s

gains also making gold more expensive for overseas

buyers.

Hawkish monetary policy from top central banks had pushed

gold, which bears no interest, to its worst quarter in over a

year.

Meanwhile, India, the world’s second biggest bullion

consumer, raised its basic import duty on gold to 12.5% from

7.5% in an attempt to lower trade deficit.

This will immediately affect demand, even though the third

quarter usually sees strong physical buying amid festivals, said

Ajay Kedia, director at Kedia Commodities in Mumbai.

Physical gold dealers in India offered steep discounts this

week as demand remained weak, with the tax hike likely to

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further sap interest.

Some U.S. retail customers are also “kind of tightening

their belts” questioning growth prospects and general inflation,

TIAA’s Gaffney said.

Euro zone inflation hit another record high in June, firming

the case for rapid ECB rate hikes starting this month.

Spot silver fell 2.7% to $19.70, and has dropped

about 6.7% this week, its biggest weekly fall since Jan. 2022.

Spot platinum slipped 2.1% to $875.50 per ounce, and

faces a fourth consecutive weekly fall. Palladium rose

0.7% at $1,950.36, gained about 3.2% this week.

(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in

Bengaluru;

Editing by Marguerita Choy)

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