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PRECIOUS-Gold steadies after slipping from six-week high

BENGALURU, July 28 (Reuters) - Gold prices steadied early on Friday after retreating from over six-week highs hit in the previous session, but was still on track for a third weekly gain.

FUNDAMENTALS

* Spot gold rose 0.2 percent to $1,260.50 per ounce at 0033 GMT. It was on track for a small weekly gain, which would give the precious metal its best sustained weekly rally since May.

* U.S. gold futures for August delivery held steady at $1,259.90 per ounce.

* The U.S. Senate voted almost unanimously on Thursday to slap new sanctions on Russia, putting President Donald Trump in a tough position by forcing him to take a hard line on Moscow or veto the legislation and infuriate his own party.

* As U.S. Senate Republican leaders feverishly tried to pass a slimmed-down Obamacare repeal, some senators threatened to bring the entire effort to a halt unless there were guarantees that the bill would be significantly changed during negotiations with the House of Representatives.

* Despite analysts' chatter that sluggish inflation may prevent the Federal Reserve from raising interest rates further soon, the rosy scene in financial markets might allow U.S. policy-makers to squeeze in another rate hike this year after all.

* Japan's core consumer prices rose 0.4 percent in June from a year earlier, government data showed on Friday. The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.4 percent annual gain.

* U.S. General Mark Milley, the chief of staff of the Army, said on Thursday that North Korea's July 4 test of an intercontinental ballistic missile showed its capabilities were advancing significantly and faster than many had expected.

* Physical gold demand globally rose to 1,895 tonnes in the first half of 2017, up 17 percent from the same period last year, GFMS analysts at Thomson Reuters said.

* India's falling trade deficit is giving the world's second-biggest gold consumer room to lower its import duty on bullion, a commerce ministry official said on Thursday.

* Holdings at the SPDR Gold Trust , the world's largest

gold-backed exchange-traded fund, fell 0.45 percent to 791.88 tonnes on Thursday from 795.42 tonnes on Wednesday.

DATA AHEAD

0130 Australia PPI Q2 0530 France GDP (INSEE) Q2 0645 France Consumer spending (INSEE) June 0900 Euro Zone Economic sentiment July 1200 Germany CPI July 1230 U.S. GDP Q2 1230 U.S. Employment cost index Q2 1400 U.S. U Mich consumer sentiment July

(Reporting by Nithin Prasad in Bengaluru; Editing by Richard Pullin)