PRECIOUS-Gold inches up as inflation concerns drive hedging

* Spot gold may rise to $1,372/oz - technicals

* Gold has gained almost 4 pct since Feb 8

(Updates prices) Feb 15 (Reuters) - Gold prices edged up on Thursday as the dollar weakened and investors banked on the bullion as a hedge against inflation after data showed a rise in U.S. consumer prices.

Spot gold was up 0.3 percent at $1,354.34 an ounce as

of 0745 GMT and headed for a fourth straight session of gains. It hit its highest since Jan. 26 at $1,355.50 on Wednesday, and has gained nearly 4 percent since it dropped to a one-month low last week.

U.S. gold futures were down 0.1 percent at $1,356.8

per ounce on Thursday. "Higher U.S. inflation combined with the US dollar exhibiting zero correlation to higher interest rates amidst burdening duel deficits (trade and budget) should play out favourably for gold markets," said Stephen Innes, head of trading APAC at OANDA said.

The dollar index against a basket of currencies was

down 0.5 percent at 88.660, after earlier hitting a near two-week low of 88.585. A recovery in broader risk sentiment was also seen weighing on the dollar, which had gained during the market turmoil earlier this month. The U.S. currency has been hit by a variety of setbacks this year, including from prospects Washington might pursue a weak dollar strategy to the perceived erosion of its yield advantage as other countries part with easier monetary policy. Concerns about the growing U.S. fiscal deficit have also weighed on the greenback. The U.S. Labor Department said its Consumer Price Index increased 0.5 percent in January as households paid more for gasoline, rental accommodation and healthcare, raising pressure on new Federal Reserve chief Jerome Powell to prevent a possible overheating of the economy. Inflation fears boost gold, which is seen as a safe haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive since it is not interest-yielding. "Gold's technicals have improved dramatically in light of Wednesday's surge and could draw further fund buying," said INTL FCStone analyst Edward Meir. Spot gold is expected to break a resistance at $1,357 per ounce and rise to the next resistance at $1,372, driven by a wave C, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver was up 0.3

percent at $16.92 an ounce after earlier hitting a more than one-week high of $16.94.

Palladium was 1.2 percent higher at $1,011.47, after

earlier hitting a one-week top of $1,013.30.

Platinum was up 0.3 percent at $999.49, after earlier

hitting $1,003.90, its highest in nearly two weeks.

(Reporting by Eileen Soreng in Bengaluru; Editing by Amrutha Gayathri and Subhranshu Sahu)