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PRECIOUS-Gold prices set for second weekly gain on dollar pullback

    * Dollar heads for second straight weekly decline
    * Palladium set for best week since early-April

 (Updates prices)
    By Eileen Soreng
    May 27 (Reuters) - Gold prices rose on Friday and were on
track for a second consecutive weekly gain on a softer dollar,
while expectations of more aggressive interest rate hikes by the
U.S. Federal Reserve eased.
    Spot gold        rose 0.5% to $1,858.97 per ounce by 1142
GMT. U.S. gold futures        were also up 0.5% at $1,856.60. 
    The dollar index       , which measures the greenback
against a basket of six other major currencies, headed for a
second consecutive week of declines, having hit a one-month low
earlier on Friday.       
    There is a little downward revision in terms of markets'
expectations of how quickly the Fed will raise interest rates,
taking some of the pressure off gold as well, said Nitesh Shah,
a WisdomTree analyst. 
    "Many people are wondering right now how much risk there is
of central banks overdoing it with their hawkish rhetoric."
    Minutes of the Fed's May 3-4 policy meeting released on
Wednesday highlighted, as the market expected, that most
participants favour additional 50 basis point rate hikes at the
June and July meetings.             
    The minutes showed the Fed grappling with how best to
navigate the economy towards lower inflation without causing a
recession or pushing the unemployment rate substantially higher.
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion and also boosts the dollar, in which it is priced.
    "Gold looks now to have found its true level and is likely
to oscillate around the $1,840-$1,860 an ounce range until there
is a fresh catalyst," Rupert Rowling, market analyst at Kinesis
Money, said in a note.
    Spot silver        climbed 1.5% to $22.33 per ounce, and has
gained about 2.7% so far this week. 
    Platinum        rose 0.2% to $951.66. Palladium        was
0.9% higher at $2,032.09, and was set for a weekly gain of about
3%, its most since early April.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Krishna
Chandra Eluri, Kirsten Donovan)
  
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