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PRECIOUS-Gold edges lower on political drama and firming dollar

* Trump fires Tillerson, sparking fears of U.S. protectionism

* Dollar recovers after easing on Tillerson news

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

(Updates prices, headline; adds comment, NEW YORK to dateline, additional byline) NEW YORK/LONDON, March 14 (Reuters) - Gold prices edged lower on Wednesday, pressured by a recovering dollar and an expectation of higher interest rates, but supported by safe-haven buying after the sudden dismissal of U.S. Secretary of State Rex Tillerson.

Spot gold declined 0.1 percent at $1,324.40 per ounce

highest since March 7.

U.S. gold futures for April delivery settled down

$1.50, 0.1 percent, at $1,325.60 per ounce. "The political uncertainty has limited the downside price risk for gold in a raising rates environment, as opposed to driving prices significantly higher," said Suki Cooper, Standard Chartered Bank precious metals analyst. Rising interest rates tend to make gold less attractive since it does not bear interest. Technical Fibonacci support for gold was at $1,317.20 an ounce with resistance at $1,336.30, said analysts at ScotiaMocatta in a note. Gold is seen as a safe haven during times of political and financial uncertainty and benefited on Tuesday when President Donald Trump fired Tillerson after a series of public rifts over policy, replacing him with loyalist CIA Director Mike Pompeo.

Investors have switched to become more risk-averse following the unexpected news of Tillerson's dismissal and the appointment of Pompeo, said OCBC analyst Barnabas Gan. The U.S. dollar inched higher against major currencies, recovering from a decline caused by the dismissal of Tillerson.

A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies. "Pompeo is a supporter of Trump's trade policy and could help advance his agenda of imposing it on U.S. trading partners ... all this uncertainty and risk aversion leaves gold as a safe haven option," Gan added. Supporting gold was news that Trump was seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors. Meanwhile, data on Tuesday showed U.S. consumer prices cooled in February amid a decline in gasoline prices and a moderation in the cost of rental accommodation, the latest indication that an anticipated pick-up in inflation probably will be gradual.

Inflation is a key economic factor the U.S. central bank considers when deciding monetary policy. A strong U.S. inflation reading could raise expectations for future interest rate increases, pressuring on non-yielding bullion.

In other precious metals, silver was barely changed

at $16.53 per ounce.

Platinum was flat at $960.60 an ounce after touching $973.20, a one-week high, and palladium dropped 0.2

percent to $988.70, reaching a near two-week high earlier at $1006.30.

(Additional reporting by Peter Hobson in London and Nithin Prasad in Bengaluru Editing by David Evans and Tom Brown)