May 22 (Reuters) - Gold slipped on Thursday after hitting a nearly two-week high earlier in the session, hurt by an uptick in the dollar, although worries over the U.S. government's increasing debt burden and fiscal outlook kept prices above $3,300 level.
Spot gold was down 0.3% at $3,303.82 an ounce, as of 1020 GMT, after hitting its highest level since May 9 earlier in the session.
U.S. gold futures fell 0.3% to $3,304.10.
"Selling coming in especially from those looking to book profits and a degree of recovery in the dollar seems to have taken some of the shine off gold," Ross Norman, an independent analyst said.
The dollar index (.DXY), edged up 0.2% against its rivals, making greenback-priced bullion more expensive for other currency holders.
"There are concerns about the way the U.S. is managing its debt issue and one would expect gold to remain relatively firm if the markets take these tax cuts in a negative way," Norman said.
Moody's cut the United States' top sovereign credit rating by one notch last week, citing concerns about its growing $36 trillion debt pile.
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U.S. Treasury Department's $16 billion sale of 20-year bonds met soft demand from investors on Wednesday, weighing on risk sentiment among investors in the Wall Street.
Market participants also worried that the U.S. government debt would swell by trillions of dollars if Congress passes President Donald Trump's proposed tax-cut bill.
Gold is often used as a safe store of value during times of political and financial uncertainty.
The dollar index (.DXY), hovered near two-week low, making the bullion more attractive for other currency holders.
Trump's sweeping tax and spending bill cleared a crucial hurdle on Thursday, as the House of Representatives voted roughly along party lines to begin a debate that should lead to a vote on passage later in the morning.
Elsewhere, spot silver fell 0.7% to $33.14 an ounce, platinum dropped 0.7% to $1,068.97 and palladium lost 2% to $1,015.97.
Reporting by Brijesh Patel and Ishaan Arora in Bengaluru; Editing by Janane Venkatraman and Shailesh Kuber
