* Dollar edges down versus currency basket
* Markets eye U.S. inflation data due on Wednesday
By Renita D. Young and Jan Harvey
NEW YORK/LONDON, Feb 13 (Reuters) - Gold prices rose on Tuesday as the U.S. dollar slipped and markets anticipated the release of impending U.S. inflation data that may offer some clues on the pace of future U.S. interest rate increases.
The dollar .DXY dropped against a basket of major world currencies, reversing some of last week's gains, when it enjoyed its best performance since 2016.
A retreat in the dollar, in which bullion is priced, has helped gold pull back nearly 2 percent from last week's one-month low of $1,306.81 an ounce.
Spot gold XAU= was up 0.4 percent at $1,327.52 per ounce by 1:34 p.m. EST (1834 GMT), earlier hitting a one-week high of $1,330.89 while U.S. gold futures GCv1 futures for April delivery settled up $4, or 0.3 percent, at $1,330.40.
While bullion is sometimes seen as a safe haven asset against risk, it benefited little last week from the slide in equities as investors moving out of stocks broadly sought refuge in the dollar. MKTS/GLOB
"The weaker U.S. dollar index really provides some underlying support for gold today," said Phillip Streible, senior commodities strategist at RJO Futures. "Some of the investors are a little more confident with the chart action of gold since it held the 50-day moving average."
U.S. bond yields and world equity markets dipped ahead of a widely anticipated U.S. inflation report later this week that may provide some indication of the pace of future interest rate hikes by the Federal Reserve. MKTS/GLOB
"GDP and CPI should be very indicative to whether the Fed will be able to raise the (interest) rates or not," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
Inflation is sometimes regarded as gold-positive, because bullion is seen as a safe haven when price pressures are rising, but expectations that the U.S. Federal Reserve will lift interest rates to fight inflation make the non-yielding metal less attractive.
Palladium XPD= was up 0.2 percent at $986.40 per ounce. The autocatalyst metal has slid nearly 14 percent since hitting a record $1,138 in mid-January but remains at elevated levels on expectations that the market will remain in deficit for a while yet.
"Over time, prices will provide the incentive to right palladium's balance, driving substitution in autocatalysts and industrial uses, as well as supporting the expansion of both recycling and new production capacity," ICBC Standard Bank said in a note.
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