PRECIOUS-Gold heads for weekly fall as fewer Fed rate cut prospects weigh

By Brijesh Patel and Anmol Choubey

June 20 (Reuters) - Gold prices fell on Friday and were on track for a weekly decline, as an overall stronger dollar and the prospect of fewer U.S. interest rate cuts offset support from rising geopolitical risks in the Middle East.

Spot gold XAU= slipped 0.8% to $3,333.99 an ounce, as of 0604 GMT, and was down 2.5% for the week so far.

U.S. gold futures GCcv1 shed 1.4% to $3,361.80.

Describing the situation in the Middle East as "fluid", Kelvin Wong, senior market analyst, Asia Pacific, at OANDA, said it is causing traders to avoid taking aggressive positions both on the long and the short side of the trade spectrum.

U.S. President Donald Trump will decide in the next two weeks whether the U.S. will get involved in the Israel-Iran air war, the White House said on Thursday, raising pressure on Tehran to come to the negotiating table.

Meanwhile, Trump reiterated his calls for the U.S. Federal Reserve to cut interest rates, saying it should be 2.5 percentage points lower.

The Fed held rates steady on Wednesday, and policymakers retained projections for two quarter-point rate cuts this year.

"Macroeconomic developments, particularly steady yields and renewed USD strength, have not supported the (gold) price," analysts at ANZ said in a note.

"Rising inflation expectations and the Fed's cautious stance have weighed on market expectations around the number of rate cuts this year."

The dollar was set to log its biggest weekly rise in over a month on Friday. A stronger greenback makes gold more expensive for other currency holders. USD/

Elsewhere, spot silver XAG= slipped 2.1% to $35.61 per ounce, while palladium XPD= fell 0.8% to $1,042.04. Platinum XPT= fell 1.9% to $1,282.72, but was heading for its third straight weekly rise.