JOHANNESBURG - Gold rose for the first session in three on Tuesday after the dollar eased as focus shifted to U.S. inflation figures later this week for further clues on monetary tightening.
The dollar sagged as investors were unconvinced that the Federal Reserve would raise rates again this year after two hikes already and eyed Friday's inflation numbers. [USD/]
Spot gold was up 0.5 percent at $1,264.30 per ounce as of 1147 GMT.
U.S. gold futures rose 0.4 percent to $1,270 per ounce.
"If we see U.S. inflation rising more than expected it will be negative for the dollar and gold could benefit," said Fawad Razaqzada, an analyst at FOREX.com.
A strong reading of U.S. inflation could reduce expectations for future interest rate increases, which would benefit non-yielding gold while adding downward pressure on the dollar.
A weaker dollar supports commodities such as gold that are priced in the U.S. currency, lowering the cost for buyers outside the United States.
"As long as we hold above $1,255, gold will maintain its bullish bias until Friday’s data is released," Razaqzada said.
Investors are also awaiting clues as to when the Fed will begin shrinking its $4.2 trillion bond portfolio.
"Given the move towards tighter monetary policy ... the developing bullish chart picture may be a warning that investors are buying more gold as an insurance against heightened risk of trouble ahead," ScotiaBank analysts said in a note.
Capping further gains in gold were world stocks, which touched a new high on Tuesday despite weaker-than-expected Chinese trade data. A higher appetite for riskier assets such as stocks usually saps demand for safe-haven gold.[MKTS/GLOB]
Meanwhile, holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 786.87 tonnes on Monday.
In other precious metals, silver inched up 0.9 percent to $16.38 per ounce.
Platinum gained 0.6 percent to $969.74 per ounce, within striking distance of a more than three-month high of $970.10 hit on Friday.
Palladium inched 1.3 percent higher to $897.50 per ounce.
"Platinum is being supported by strong fundamentals as supply in comparison to demand is a little weak," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
(Additional reporting by Nithin Prasad and Arpan Varghese in Bengaluru; editing by Dale Hudson and Jason Neely)