PRECIOUS-Gold climbs on dollar dip, but prices set for weekly drop


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      Gold, silver face third weekly fall

      Biden and McCarthy near deal that would raise debt

      US PCE Price Index due at 1230 GMT 

 (Adds graphics, comment in paragraph 9, details and updates
prices throughout)
    By Arundhati Sarkar
       May 26 (Reuters) - Gold prices rose on Friday after the
dollar retreated from a two-month high, although bullion was
poised for a third straight weekly drop as traders assessed the
progress of the U.S. debt ceiling negotiations and the Federal
Reserve's next policy move.
    Spot gold  XAU=  rose 0.5% to $1,950.39 per ounce by 0647
GMT, after touching its lowest since March 22 at $1,936.59. U.S.
gold futures  GCv1  added 0.4% to $1,950.60.
    Still, bullion has lost 1.3% so far in the week.
    Overwhelmingly, the market anticipates the debt crisis will
be resolved, and that "a tightening horizon" will put downward
pressure on gold, Clifford Bennett, chief economist at ACY
Securities, said.
    "The Fed may indeed pause at the next meeting, as they
should, given both the debt ceiling crisis, even with a
resolution, and the ongoing, albeit in the background, banking
crisis," Bennett said.
    The dollar  .DXY  dipped 0.2%, but hovered near its highest
level since March 17. Benchmark Treasury yields were also near
highs seen in March.  USD/   US/ 
    U.S. President Joe Biden and top congressional Republican
Kevin McCarthy on Thursday appeared to be near a deal to cut
spending and raise the government's $31.4 trillion debt ceiling,
with little time to spare to head off the risk of default.
    Markets are pricing in a 37.8% chance of a 25-basis-point
hike in June, according to the CME FedWatch tool.
    Further tightening is not ruled out, but buying could emerge
after recent price correction, ANZ commodity strategist Soni
Kumari said.
    On the data front, investors will scan the personal
consumption expenditure (PCE) figures due at 1230 GMT. 
    Spot silver  XAG=  rose 1.2% to $23.04 per ounce, but was on
track for a third consecutive weekly dip.
     Platinum  XPT=  advanced 0.9% to $1,029.33, and palladium
 XPD=  climbed 1% to $1,430.79.

 (Reporting by Arundhati Sarkar in Bengaluru; Editing by
Subhranshu Sahu, Sonia Cheema, Sherry Jacob-Phillips and Barbara
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