Can I use an Apple Gift Card for an iPhone purchase

Yes, if you buy it from Apple; if you've redeemed the card online, it can't be used in a physical store.

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Niel – are you sure the Apple Account card in the Wallet app can’t be used in an Apple Retail Store? The support articles is ambiguous, but the T&C is specific,

“When you link your physical or digital Apple gift cards with your Associated Balance, add funds to your Associated Balance, or click the “plus” icon in your Apple Wallet app, we may provision a virtual Apple Account Associated Balance card to your Wallet app (“Virtual Card”). Your Virtual Card is a digital depiction of your Associated Balance that can be used at Apple Retail Stores.”

Legal - iTunes Gift Cards and Codes - Apple

I’m sure it will vary from country to country/region.