PRECIOUS-Gold heads for best week in more than a month on US fiscal worries

May 23 (Reuters) - Gold was on track for its best weekly gain in over a month on Friday, as a softer dollar and mounting concerns about the deteriorating fiscal outlook of the world's biggest economy boosted the metal's safe-haven appeal.

FUNDAMENTALS

Spot gold XAU= gained 0.2% to $3,299.79 an ounce as of 0014 GMT. Bullion is up about 3% so far this week and on track for it best weekly performance since early April.

U.S. gold futures GCcv1 rose 0.2% to $3,299.60.

The dollar .DXY has lost more than 1% so far this week and is set for its worst weekly performance since April 7, making greenback-priced gold cheaper for holders of other currencies.

The Republican-controlled U.S. House of Representatives passed a sweeping tax and spending bill on Thursday, embedding much of President Donald Trump's policy agenda and adding trillions of dollars more to the national debt.

What Trump dubbed a "big, beautiful bill", is now headed to the Senate, which Republicans control by a 53-47 margin.

On Wednesday, the U.S. Treasury Department saw soft demand for a $16 billion sale of 20-year bonds. Investor sentiment was already fragile after Moody's downgraded the U.S. triple-A credit rating last week.

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

Meanwhile, Iran's Foreign Minister Abbas Araqchi warned that the U.S. would bear legal responsibility for any Israeli attack on Iranian nuclear facilities, following a CNN report that Israel is preparing strikes on Iran.

Spot silver XAG= was steady at $33.07 an ounce, platinum XPT= rose 0.1% to $1,082.47 and palladium XPD= lost 0.3% to $1,012.00.

DATA/EVENTS (GMT)