PRECIOUS-Gold firms as dollar wilts ahead of U.S. inflation data

* Dollar edges down ahead of U.S. inflation report

* Numbers watched for impact on U.S. monetary policy

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

(Updates throughout, adds LONDON dateline) LONDON, Feb 14 (Reuters) - Gold rose for a third day on Wednesday, pulling further away from last week's one-month low as the dollar wilted ahead of U.S. inflation data due later in the day. Investors are awaiting clues from the report on the outlook for U.S. monetary policy, which will likely be influenced by the strength of price pressures on the economy. The dollar hit a 15-month low against the yen in early trade. That helped buoy gold, which is priced in the U.S. currency.

Spot gold was up 0.1 percent at $1,330.96 an ounce at 1030 GMT, while U.S. gold futures for April delivery were

up $2.70 an ounce at $1,333.10. Gold fell last week as investors selling out of sliding stock markets opted for the dollar as an alternative investment. The U.S. currency has since given up two-thirds of its gains for the month, and remains under pressure ahead of the inflation data. The U.S. inflation report for January, due for release at 1330 GMT, could raise expectations for faster U.S. interest rate hikes if it indicates price pressures are building. "U.S. monetary policy is still the main driver for the yellow metal," ActivTrades' chief analyst Carlo Alberto De Casa said. "Any jump in U.S. inflation could generate selling on gold, as investors will probably see further raises on the horizon." While inflation can boost demand for bullion as a safe store of value, the positive impact of that may be offset by a rise in interest rates, which makes non-yielding gold less attractive. European stocks rose ahead of the report, while the dollar eased 0.1 percent against the euro. The world's largest gold-backed exchange-traded fund, SPDR

Gold Shares , reported an inflow of nearly 3 tonnes on

Tuesday, following their worst weekly fall since July 30. On the physical side of the market, gold demand in major consumer China was weak in the run-up to the New Year holiday that will begin on Thursday, dealers said. "Today marks the final day before China takes a week-long holiday for their Lunar New Year celebrations," MKS said in a note. "Volumes were again lower than the previous day." The premium for gold in Shanghai over the spot price fell to $6 an ounce on Tuesday, it said, from $8-9 at the end of last week.

Among other precious metals, silver was up 0.1 percent at $16.57 an ounce, while palladium was flat at $985 an ounce. Platinum was up 0.1 percent at $974.50.

(Additional reporting by Eileen Soreng in Bengaluru, editing by David Evans)