* Silver dips 3.5%, platinum down 2.8%
* Palladium slips after hitting record peak of $1,676.53/oz
* Dollar index touches 2-week high (Updates prices)
By Sumita Layek
Sept 25 (Reuters) - Gold slid 2% on Wednesday, retreating from a multi-week peak, as political uncertainties in the United States stemming from an impeachment inquiry into President Donald Trump drove investors to the safety of the dollar, limiting bullion’s appeal.
Spot gold fell 1.8% to $1,504.61 per ounce by 02:13 p.m. EDT (1813 GMT). Prices had earlier dropped as much as 2% to $1,501.55 an ounce.
U.S. gold futures settled down 1.8% at $1,512.3 an ounce.
The dollar index hit a two-week high on safe haven interest amongst investors looking to hedge against risks emanating from the inquiry into Trump accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election, in turn limiting the appeal of the traditional haven, gold.
“It (gold’s pullback) started out with the strength in the dollar weakening the metals and crude; the dollar seems to be a haven,” said George Gero, managing director at RBC Wealth Management.
Gold, however, will continue to be supported “because besides the impeachment worries, everywhere the investor looks, he sees nothing but new worries which support gold prices like continuation of Middle East problems, tariff talks with China etc.”
On Tuesday, prices hit their highest since Sept. 5 at $1,535.60.
Adding to an increasingly fragile backdrop on the global geopolitical front, U.S. Secretary of State Mike Pompeo on Wednesday announced the United States is imposing sanctions on certain Chinese entities for knowingly transferring oil from Iran.
“The major underlying factor holding gold near highs is the debt that is out there with all these countries and negative interest rates ... so when you have that, you need to own gold, what else are you going to use to hedge inflation,” said Michael Matousek, head trader at U.S. Global Investors.
“You can use bitcoin, but gold is un-hackable; bitcoin can be hacked, gold is the un-hackable bitcoin.”
Also on the radar was the long drawn U.S.-China trade dispute, Trump delivering a stinging rebuke to China’s trade practices in a speech on Tuesday, saying he would not accept a “bad deal” in the negotiations.
However, U.S. stock indexes hit session highs after Trump said a trade deal with China could happen sooner than expected.
Among other precious metals, palladium dipped 1.7% to $1,644.37 an ounce, after hitting a record high of $1,676.53 earlier in the session.
The metal has rallied more than 20%, or nearly $300, since touching a near two-month low in early August, driven by a sustained supply deficit for the autocatalyst metal.
Silver slid 3.5% to $17.93 an ounce, while platinum fell 2.8% to $926.67. (Reporting by Sumita Layek and Swati Verma in Bengaluru Editing by Marguerita Choy and Kirsten Donovan)