* SPDR Gold Trust holdings at 1-1\/2-month high<\/p>\n
* Gold gains for a fourth straight session<\/p>\n
* Dollar slips to near three-month low<\/p>\n
* Silver hits highest level since February (Recasts, adds comment, updates prices)<\/p>\n
May 18 (Reuters) – Gold prices firmed on Tuesday after hitting their highest in nearly four months, helped by a weaker U.S. dollar and as investors used the non-yielding bullion as a hedge against rising inflation.<\/p>\n
Spot gold was up 0.2% at $1,868.30 per ounce by 0854 GMT, after hitting its highest since Jan. 29 earlier in the session. U.S. gold futures rose 0.1% to $1,869.60.<\/p>\n
\u201cThe narrative is clearly shifting towards inflation … but perhaps more critically, you have got the U.S. dollar weakness, which is probably the key and prime driver,\u201d said independent analyst Ross Norman.<\/p>\n
Analysts also noted that inflows into gold exchange-traded-funds indicated that investors were buying gold to hedge against inflation worries.<\/p>\n
Holdings of SPDR Gold Trust, the world\u2019s largest gold-backed exchange-traded fund, rose 0.7% to 1,035.93 tonnes on Monday, their highest since late-March.<\/p>\n
In the wake of rising prices in the United States, minutes of the Federal Reserve\u2019s last policy meeting due on Wednesday are expected to provide further clarity on the central bank\u2019s monetary policy outlook and policymakers\u2019 views on inflation.<\/p>\n
Dallas Fed Bank President Robert Kaplan reiterated his view that he does not expect interest rates to rise until next year.<\/p>\n
\u201cFed will not be tempted to rock the boat in terms of the recovery which is gathering some momentum. Raising rates or discussion on tapering would probably be counterproductive at this stage,\u201d Norman said.<\/p>\n
Gold is also getting support from chart-based buyers after the bullion broke above its 200-day moving average, considered to be a bullish signal.<\/p>\n
Elsewhere, silver jumped 1.1% to $28.49, after hitting its highest since Feb. 2 in the session.<\/p>\n
The gold\/silver ratio has dropped to around 65.5, meaning that silver has climbed even more sharply than gold, Commerzbank analysts wrote in a note.<\/p>\n
Palladium gained 1.1% to $2,932, while platinum fell 0.6% to $1,232.<\/p>\n