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PRECIOUS-Gold dips, down for week; market braces for Fed rate hike

    * Gold down 0.8 percent this week
    * Investors braced for U.S. rate hike next week 
    * U.S. political uncertainty fuels some safe-haven demand

 (Updates prices; adds comment, additional byline, NEW YORK to
dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, March 16 (Reuters) - Gold prices dipped on
Friday and were set for their biggest weekly fall in three weeks
on pressure from a stronger U.S. dollar and expectations that
the U.S. Federal Reserve will raise interest rates next week for
the first time this year. 
    Losses were limited by political tumult in the United States
which fueled safe-haven demand for bullion.
    A Fed rate hike generally lifts bond yields, making
non-yielding bullion less attractive. Higher U.S. interest rates
also tend to strengthen the dollar, making gold more expensive
for users of other currencies.
    Spot gold        dipped 0.3 percent, trading at $1,312.36
per ounce by 1:35 p.m. EST (1735 GMT). It was on track to end
the week down 0.8 percent.
    U.S. gold futures         for April delivery settled down
$5.50, or 0.4 percent, at $1,312.30 per ounce. 
    Gold has tended in recent years to fall before U.S. interest
rate hikes and rally afterwards. 
    "It recovers because the interest rates that we're seeing
right now are not negative for gold," added Jeffrey Christian,
managing partner of CPM Group.            
    Technical support for gold was at its 100-day moving average
around $1,304, the psychologically important level of $1,300 and
the 200-day moving average at $1,290.
    Gold prices were supported by deepening U.S. political
uncertainty and fears that U.S. tariffs on aluminum and steel
could disrupt global trade.
    On Thursday, the Washington Post reported that Donald
Trump's national security adviser, H.R. McMaster, would become
the latest senior official to leave his post. The New York Times
said U.S. Special Counsel Robert Mueller had issued a subpoena
for documents related to Trump's businesses.             
            
    "There is a lot of confusion in the market about what the
White House's strategy is on any large macro issues," said
Mitsubishi Analyst Jonathan Butler. 
    "These factors should keep gold above $1,300, but it's more
of a holding pattern and a generally supportive environment than
something that is going to raise prices significantly." 
    Bob Haberkorn, senior market strategist at RJO Futures, said
gold prices are low relative to other commodities.
    A diplomatic crisis between Russia and Britain over the
poisoning of a former Russian double agent on English soil 
underlined gold safe-haven appeal.             
    Among other precious metals, silver        lost 0.5 percent
at $16.29 an ounce, poised for a 1.9 percent weekly drop, its
largest weekly decline since early February.
    Platinum        dropped 0.5 percent at $949.10 an ounce, on
track for a 1.6 percent weekly decline. Palladium       
increased 0.7 percent at $993.10 an ounce, ending the week
barely changed.

 (Additional reporting by Nallur Sethuraman and Arpan Varghese
in Bengaluru
Editing by David Gregorio and Mark Heinrich)
  
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