PRECIOUS-Gold dips as yields gain in run up to Fed rate hike decision

       * Fed decision due at 1800 GMT
    * Markets have priced in 50 bps hike - analyst
    * Dollar steady near 20-year peaks

 (Adds comment, updates prices)
    By Bharat Gautam
    May 4 (Reuters) - Gold prices fell on Wednesday, as higher
U.S. Treasury yields and a looming interest rate hike
announcement by the Federal Reserve dented demand for zero-yield
    Spot gold        was down 0.2% at $1,864.61 per ounce as of
0438 GMT. U.S. gold futures        fell 0.4% to $1,863.50.
    Benchmark U.S. 10-year Treasury yields firmed ahead of a
widely expected interest rate hike from the Fed as it attempts
to contain soaring U.S. inflation.
    While gold is seen as an inflation hedge, higher short-term
U.S. interest rates and bond yields tend to increase the
opportunity cost of holding non-yielding bullion.
    The U.S. central bank's Federal Open Market Committee is set
to release a policy statement at 1800 GMT, followed by Fed Chair
Jerome Powell's news conference.
    Market participants expect a decision on raising the
benchmark overnight interest rates and details on reducing the
Fed's $8.9 trillion balance sheet.
    "A 50 basis point hike is now priced in by markets ... If
the statement has a still more hawkish bias, then gold is likely
to come under pressure once again," said OANDA senior analyst
Jeffrey Halley.
    "If the statement remains mostly unchanged in its guidance,
then a short-term recovery to $1,880 is possible as the U.S.
dollar is likely to fall."
    The dollar remained close to 20-year peaks, making
greenback-priced gold less attractive for overseas buyers.

    Bullion is seen as a safe store of value during times of
economic and political crises.
    Spot silver        gained 0.1% to $22.57 per ounce, while
platinum        rose 0.6% to $967.34, and palladium        was
flat at $2,256.38.
    Auto supply chain constraints, including chip shortages, are
still having a negative impact on car production and platinum
demand; car restocking, once supply chain bottlenecks ease,
should boost demand for platinum (used in auto-catalysts), UBS
strategist Giovanni Staunovo said in a note.

 (Reporting by Bharat Govind Gautam in Bengaluru; editing by
Uttaresh.V and Vinay Dwivedi)

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