PRECIOUS-Gold dips 2% as investors opt for dollar amid Trump probe

* Silver dips 3.5%, platinum down 2.8%
* Palladium slips after hitting record peak of $1,676.53/oz
* Dollar index touches 2-week high

(Updates prices)
By Sumita Layek
Sept 25 (Reuters) - Gold slid 2% on Wednesday, retreating
from a multi-week peak, as political uncertainties in the
United States stemming from an impeachment inquiry into
President Donald Trump drove investors to the safety of the
dollar, limiting bullion's appeal.
Spot gold XAU= fell 1.8% to $1,504.61 per ounce by 02:13
p.m. EDT (1813 GMT). Prices had earlier dropped as much as 2% to
$1,501.55 an ounce.
U.S. gold futures GCcv1 settled down 1.8% at $1,512.3 an
ounce.
The dollar index .DXY hit a two-week high on safe haven
interest amongst investors looking to hedge against risks
emanating from the inquiry into Trump accusing him of seeking
foreign help to smear Democratic rival Joe Biden ahead of next
year's election, in turn limiting the appeal of the traditional
haven, gold. USD/
"It (gold's pullback) started out with the strength in the
dollar weakening the metals and crude; the dollar seems to be a
haven," said George Gero, managing director at RBC Wealth
Management.
Gold, however, will continue to be supported "because
besides the impeachment worries, everywhere the investor looks,
he sees nothing but new worries which support gold prices like
continuation of Middle East problems, tariff talks with China
etc."
On Tuesday, prices hit their highest since Sept. 5 at
$1,535.60.
Adding to an increasingly fragile backdrop on the global
geopolitical front, U.S. Secretary of State Mike Pompeo on
Wednesday announced the United States is imposing sanctions on
certain Chinese entities for knowingly transferring oil from
Iran. "The major underlying factor holding gold near highs is the
debt that is out there with all these countries and negative
interest rates ... so when you have that, you need to own gold,
what else are you going to use to hedge inflation," said Michael
Matousek, head trader at U.S. Global Investors.
"You can use bitcoin, but gold is un-hackable; bitcoin can
be hacked, gold is the un-hackable bitcoin."
Also on the radar was the long drawn U.S.-China trade
dispute, Trump delivering a stinging rebuke to China's trade
practices in a speech on Tuesday, saying he would not accept a
"bad deal" in the negotiations. However, U.S. stock indexes hit session highs after Trump
said a trade deal with China could happen sooner than expected.
Among other precious metals, palladium XPD= dipped 1.7% to
$1,644.37 an ounce, after hitting a record high of $1,676.53
earlier in the session.
The metal has rallied more than 20%, or nearly $300, since
touching a near two-month low in early August, driven by a
sustained supply deficit for the autocatalyst metal.
Silver XAG= slid 3.5% to $17.93 an ounce, while platinum
XPT= fell 2.8% to $926.67.