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PRECIOUS-Gold charges higher as dollar, yields retreat after big Fed rate hike

       * U.S. Fed hikes rates by 75 bps
    * Silver rises over 3%

 (Recasts throughout, adds comments, updates prices)
    By Kavya Guduru
    June 15 (Reuters) - Gold rallied on Wednesday as the dollar
and Treasury yields retreated after the Federal Reserve
announced the biggest U.S. interest rate hike since 1994 and
flagged economic risks.
    The Fed raised its target interest rate by three-quarters of
a percentage point to stem a surge in inflation and projected a
slowing economy and rising unemployment in months
ahead.
    Spot gold        rose 1.4% to $1,833.42 per ounce by 4:09
p.m. EDT (2009 GMT), while U.S. gold futures        settled up
0.3% at $1,819.60 per ounce.
    Gold received a shot in the arm as the dollar and yields
fell, especially after Fed Chair Jerome Powell said 75 bps hike
would not be common and if inflation flattens out, the Fed may
not need to be as aggressive in raising rates, said Phillip
Streible, chief market strategist at Blue Line Futures in
Chicago.
    The dollar's        retreat bolstered gold's appeal among
overseas buyers, while benchmark U.S. Treasury yields also
dipped.
    "Gold is shouldering higher behind a strong asset rally led
by bonds after Powell declared failure to achieve price
stability was not an option," said Tai Wong, an independent
metals trader in New York, noting gold's price action has been
positively correlated to moves in bond and stock markets of
late.
     "But gold's runway may be limited in a higher and clearly
rising rate environment. $1,880-$1,900 per ounce will be a very
tough hurdle."
    Rate hikes generally tend to reduce appeal for the
non-yielding asset, although it is considered an inflation
hedge.
    Goldman Sachs said a "wealth shock" due to lockdowns in
China merely delayed rather than derailed its upside view for
bullion.
    Other metals latched on to gold's run. Spot silver
rose 2.9% to $21.69 per ounce, while platinum        was up 2.2%
at $940.79. Palladium        rose 2.6% to $1,862.33 per ounce.

 (Reporting by Kavya Guduru and Arpan Varghese in Bengaluru;
Editing by Anil D'Silva and Shinjini Ganguli)

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