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Gold down nearly 1% so far in the week

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Palladium sees biggest weekly drop in two months

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India raises base import price of gold, silver

Dec 16 (Reuters) - Gold prices edged higher on Friday as the dollar eased, but the non-yielding metal was bound for a weekly decline as the U.S. Federal Reserve projected higher interest rates for a longer period.

Spot gold rose 0.2% to $1,780.78 per ounce, as of 0621 GMT. U.S. gold futures were up 0.1% at $1,789.00.

The dollar index slipped 0.2%, making bullion cheaper for overseas buyers.

Gold is attempting to stabilize but keeps getting pressured by the volatility surrounding inflation and the outlook for Fed rates, said Clifford Bennett, chief economist at ACY Securities.

Gold prices have slipped nearly 1% so far in the week, retreating sharply from a 5-1/2 month high since the Fed on Wednesday raised interest rates by 50 basis points as expected and Chair Jerome Powell said the central bank would deliver more hikes next year even as the economy slips towards a recession.

Central banks in Europe followed the Fed in slowing the pace of interest rate increases but offered a similar stark message that financial conditions will continue to tighten even as economic performance deteriorates.

Although gold is traditionally known as a hedge against inflation and economic uncertainties, higher interest rates tend to dim bullion's appeal by increasing the opportunity cost of holding the non-yielding metal.

Meanwhile, India raised the base import prices of gold and silver late on Thursday. India is the world's biggest importer of silver and the second-biggest consumer of gold.

Spot silver rose 0.2% to $23.00 per ounce, but was down 2% for the week.

Platinum gained 0.6% to $1,000.54. Palladium rose 1.5% to $1,817.88 but was headed for its biggest weekly drop in two months.

Recession risks will lead to weaker industrial demand and this might affect platinum and palladium more because of their use in the automotive industry, said Ilya Spivak, head of global macro at Tastytlive. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)