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PRECIOUS-Gold gains, set for weekly rise as U.S. yields drop

       * Gold headed for fourth straight weekly gain
    * U.S. Treasury yields dip

 (Recasts, adds comments and updates prices)
    By Ashitha Shivaprasad
    Aug 12 (Reuters) - Gold prices drifted higher on Friday
helped by a drop in U.S. Treasury yields and setting the metal
on path for a fourth straight week of gains, as investors took
stock of the recent inflation data out of the United States.
    Spot gold        was up 0.2% at $1,793.39 per ounce, as of
1432 GMT and was headed for a more than 1% weekly rise. U.S.
gold futures        rose 0.1% to $1,808.50.
    "Currently the gold market is seeing some short-covering and
is supported by lower yields," said Bart Melek, head of
commodity strategy at TD Securities.
    U.S. Treasury yields dipped after a volatile week as
investors evaluated whether an apparent slowdown in inflation
increases could reduce the speed of Federal Reserve interest
rate hikes.
    Data released earlier this week indicated that inflation in
the U.S. has cooled down, following which market participants
toned down expectations of an aggressive rate hike by the Fed.
    However, recent Fed commentary continues to be hawkish and
have stopped the metal from breaking above the $1,800 level.
    "Gold's rally, after cooler CPI numbers, stopped in its
tracks as the market believes inflation will continue to be a
problem. Fed speakers have also suggested they can't afford to
relinquish the fight against inflation," Melek added.
    Gold tends to do well in a low-interest environment as it
yields no interest.
    "Rising risk appetite as seen through surging stocks and
bond yields ... have so far prevented the yellow metal from
making a decisive challenge at key resistance above $1,800,"
Saxo Bank analyst Ole Hansen said.
    Meanwhile, high domestic prices restrained physical gold
demand in India this week, while uncertainty surrounding
Taiwan-related developments prompted bullion importers in China
to hold off on big purchases.
    Spot silver        rose 1.2% to $20.53 per ounce, palladium
       slipped 0.9% to $2,256.36.
    Platinum        fell 0.6% to $950.47 per ounce.

 (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by
Shounak Dasgupta)

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