Gold set for second weekly drop on worries over big rate hikes

* SPDR Gold ETF holdings fell 8.7 tonnes on Thursday

* Without global recession fears, gold would be lower - analyst

* Silver, platinum too face weekly drops; Palladium set to gain (Updates prices)

By Bharat Gautam

June 24 (Reuters) - Gold prices were flat on Friday but on course for their second straight weekly decline, with worries over major central banks potentially implementing big interest rate hikes to contain runaway inflation weighing on bullion demand.

Spot gold XAU= was little changed at $1,822.70 per ounce, as of 0724 GMT, after hitting a one-week low of $1,820.99 earlier in the session. U.S. gold futures GCv1 fell 0.3% to $1,824.10.

Gold prices have dropped about 0.9% this week.

The U.S. Federal Reserve's commitment to reining in 40-year-high inflation is "unconditional," its chair Jerome Powell told lawmakers, even as he acknowledged that sharply higher interest rates may push up unemployment.

"The U.S. dollar remains firm and expectations now lean towards a 75-basis-point Fed hike in July. The TIPS spread – a market-based proxy for inflation expectations – is also near a four-month low, and these have kept a lid on any gold rally," City Index senior market analyst Matt Simpson said.

The dollar index =USD was slightly lower, making greenback-priced gold less expensive for buyers holding other currencies.

Benchmark U.S. 10-year Treasury yields edged down, likely buoying demand for gold.

Higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest.

"Gold looks vulnerable over the near-term, given its inability to break $1,850, its 200-day average, this week," Simpson said, adding that, "were it not for the fear of a global recession then gold would likely be lower than it already is."

SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.81% to 1,063.07 tonnes on Thursday from 1,071.77 tonnes a day earlier.

Spot silver XAG= fell 0.4% to $20.86 per ounce, while platinum XPT= rose 1.1% to $916.24, but both were set for weekly losses.

Palladium XPD= climbed 1.2% to $1,865.99, and has gained about 2.8% this week.
Reporting by Bharat Govind Gautam in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu

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