PRECIOUS-Gold falls on dollar uptick, profit taking

By Sarah Qureshi

May 22 (Reuters) - Gold swung to losses on Thursday as the U.S. dollar strengthened and investors booked profits after prices touched a two-week high earlier in the session.

Spot gold XAU= was down 0.6% at $3,295.21 an ounce, by 1216 p.m. ET (1616 GMT). Prices reached their highest level since May 9 earlier in the session before falling more than 1%. Gold has recorded gains in the previous three sessions.

U.S. gold futures GCcv1 also fell 0.6% to $3,294.90.

The dollar index .DXY rose 0.3%, making bullion more expensive for foreign currency holders. USD/

"We're seeing some profit taking pressure from recent gains and a firmer U.S. dollar index is another bearish factor," Jim Wycoff, senior analyst at Kitco Metals.

"The specter of a shaky global bond market is going to be a bullish underlying factor for the gold market that's going to limit the downside."

Bond vigilantes continued to stalk global debt markets as the U.S. House of Representatives passed President Donald Trump's "big beautiful" tax bill by a single vote.

The bill will add about $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade, according to the nonpartisan Congressional Budget Office.

Gold is used as a safe store of value during times of political and financial uncertainty.

Data showed U.S. business activity picked up in May amid a truce in the trade war between Washington and China, but Trump's sweeping tariffs on imported goods raised prices for companies and consumers.

Trade deals from the U.S. administration are expected to be announced in the coming weeks and these will play a crucial role in shaping gold prices for the remainder of the year, said Zain Vawda, analyst at MarketPulse by OANDA.

Elsewhere, spot silver XAG= fell nearly 1% to $33.05 an ounce, platinum XPT= edged 0.1% lower to $1,075.02 and palladium XPD= lost 2.1% to $1,016.02.