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PRECIOUS-Gold Gains after Powell Calms Interest Rate Jitters

* Uncertain tapering timetable a downside risk for gold-analyst

* Fed won’t raise rates on fear of inflation - Powell (Recasts, adds comment, updates prices)

June 23 (Reuters) - Gold prices firmed on Wednesday after U.S. Federal Reserve Chair Jerome Powell’s pledge to keep interest rates near zero for some time pushed the dollar towards a one-week low.

Spot gold rose 0.2% to $1,782.46 per ounce by 0751 GMT and U.S. gold futures gained 0.3% at $1,782.40.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion. It fell 6% last week after the Fed struck a hawkish tone at its meeting and signalled interest rate hikes in 2023.

Powell’s comments on Tuesday reaffirmed intent to encourage a “broad and inclusive” job market recovery, and not raise interest rates based only on fears of coming inflation.

“Economic numbers are just showing a sign of recovery... can’t say they will be consistent in the coming period. That has been a support for gold,” said Ajay Kedia, director at Kedia Commodities in Mumbai.

France and Germany enjoyed booming business activity in June, according to preliminary composite Purchasing Managers’ Indexes (PMI) compiled by IHS Markit. U.S. flash PMIs are due later in the day and are expected to stay at elevated levels.

The dollar index on Wednesday retreated from the two-month high hit last week, making gold cheaper for holders of other currencies.

However, the gold market may stay under pressure nonetheless, after recent moves in Fed “dot plot” projections shifted focus towards the tapering timetable, Standard Chartered analysts said.

“A tapering timetable is still uncertain but is being discussed, which is a downside risk for gold prices,” they told clients.

Elsewhere, silver rose 0.7% to $25.93 per ounce, palladium climbed 1.5% to $2,595.96. Platinum was up 0.9% at $1,089.16.

Reporting by Eileen Soreng, Arundhati Sarkar and Brijesh Patel in Bengaluru; Editing by Amy Caren Daniel

Source: Reuters

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