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PRECIOUS-Gold flat as market weighs political drama and firm dollar

* Trump fires Tillerson, sparking fears of U.S. protectionism Dollar eases, stocks dip on Tillerson news

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

(Updates throughout, adds LONDON dateline) LONDON, March 14 (Reuters) - Gold prices steadied on Wednesday, supported by safe-haven buying after the sudden dismissal U.S. Secretary of State Rex Tillerson but pressured by a recovering dollar. The U.S. dollar inched higher against major currencies after edging lower following the dismissal of Tillerson. A stronger dollar makes commodities it is priced in more expensive for holders of other currencies.

Spot gold was flat at $1,325.97 per ounce at 1116

GMT. It touched $1,330.02 an ounce during the session, its highest since March 7.

U.S. gold futures for April delivery fell 0.1

percent to $1,326.30 per ounce. "Currently gold is caught between these negative impacts and sometimes positive impacts are coming from a weaker stock market, U.S. policy and also the frequent shift between risk-on and risk-off by investors," said Quantitative Commodity Research analyst Peter Fertig. In range-bound trading, a key level for gold on the upside is $1,330 and on the downside the previous session's low at $1,350 was a marker, said FOREX.com analyst Fawad Razaqzada. 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.

Risk aversion is back on the table following the unexpected news of Tillerson's dismissal and the appointment of Pompeo, said OCBC analyst Barnabas Gan. "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. 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, which would put pressure on non-yielding bullion.

In other precious metals, silver rose 0.2 percent to

$16.58 per ounce.

Platinum hit a one-week high, up 0.8 percent to $969.40 per ounce and palladium edged 1.1 percent higher

to $1,001.97 per ounce after it touched a near two-week high.

(Additional reporting by Nithin Prasad in Bengaluru Editing by Elaine Hardcastle)