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PRECIOUS-Gold dips on firmer dollar as investors digest Fed rate hike

       * Fed hikes key interest rate by 75 bps
    * Overall upward USD trend makes gold outlook cautious -

 (Updates details and prices)
    By Bharat Gautam
    June 16 (Reuters) - Gold eased on Thursday, as the dollar
recovered to head back towards a 20-year peak, after a large but
widely expected interest rate hike by the U.S. Federal Reserve
sent the currency lower in the previous session.
    Spot gold        fell 0.3% to $1,827.60 per ounce by 0546
GMT. U.S. gold futures        rose 0.6% to $1,830.60.
    The conflicting currents of support from potential
safe-haven demand and inflationary hedge buying versus pressure
from a higher rate regime are keeping gold prices balanced, said
Michael McCarthy, chief strategy officer at Tiger Brokers,
    Higher short-term U.S. rates and bond yields increase the
opportunity cost of holding bullion, which yields no interest.

    The Fed on Wednesday approved a 75 basis point rate hike,
its largest since 1994, to stem a surge in inflation, and
flagged a slowing economy.
    "Gold has been remarkably range-bound for weeks now (despite
major news)... and it's a real head-scratcher for traders at the
moment to work out what exactly will drive gold out of this
range," McCarthy said, adding, the dollar's overall upward trend
presented a cautious outlook for gold.
    Asian stocks stumbled and the dollar regained its footing,
with the dollar index       , which hit a high since 2002 of
105.79 on Wednesday, trading at 105.30.
    The Fed's announcement drove longer-dated U.S. government
bond yields lower and nudged the dollar off the two-decade peak,
which took greenback-priced gold as much as 1.9% higher in the
previous session.
    Key investors with big positions in gold know that the
economic outlook is still challenging and still prefer to hold
bullion as a safe-haven asset, said Brian Lan, managing director
at dealer GoldSilver Central.
    Spot silver        fell 0.6% to $21.52 per ounce, platinum
       retreated 1% to $930.22, and palladium        dipped 1%
to $1,841.61.

 (Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Shailesh Kuber, Subhranshu Sahu and Rashmi Aich)

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