* Gold support at $1,300, resistance at $1,345
* Eyes on U.S. inflation data due Wednesday
(Recasts, adds comment, LONDON dateline) LONDON, Feb 12 (Reuters) - Gold prices rose on Monday as the dollar slipped, but gains are expected to be capped ahead of inflation data from the United States this week that could mean U.S. interest rates increase more quickly than expected.
Spot gold was up 0.4 percent at $1,321.16 an ounce at
0940 GMT. It has fallen more than 3 percent since hitting a 17-month peak at $1,366.07 in January. U.S. gold futures rose 0.6 percent to $1,323.20 an ounce. Worries about inflation in the United States surfaced after data this month showed jobs growth surged and wages rose, bolstering expectations that the U.S. labor market would hit full employment this year. U.S. inflation data for January is due on Wednesday and the U.S. Federal Reserve next meets on March 20-21. "The story is and will be about U.S. monetary policy and dollar direction," Julius Baer analyst Carsten Menke said. "U.S. growth is more solid, wages are rising and the worry is the Fed will be forced into more rate hikes than currently expected." A lower U.S. currency makes dollar-denominated gold cheaper for holders of other currencies, potentially boosting demand. The dollar slipped against a basket of six major currencies as a bounce in equity markets ended a strong run for the greenback, used by investors as a safe place to park assets in times of financial market volatility. "Gold has picked up a little in the last 24 hours, as a hint of dollar weakness creeps back into markets," said Jordan Eliseo, chief economist at gold trader ABC Bullion. Hedge funds and money managers slashed their net long position in COMEX gold for the first time in eight weeks in the week to Feb. 6, and cut it in silver, U.S. Commodity Futures Trading Commission data showed on Friday. Gold faces strong resistance at the 100-day moving average around $1,345. A break of support at $1,300 could see the market trying to test the 21-day moving average at around $1,275.
Silver gained 0.6 percent to $16.44 an ounce, platinum was flat at $964.50 an ounce and palladium
was up 0.7 percent at $983.33 an ounce.
(Additional reporting by Nallur Sethuraman and Nithin Prasad in Bengaluru; Editing by Dale Hudson)