By Pratima Desai and Swati Verma
LONDON (Reuters) - Gold prices rose on Wednesday and the dollar slipped against a basket of currencies and as the market waited for clues on the timing of interest rate rises in the United States.
Spot gold was trading up 0.2 percent at $1,321.91 an ounce at 1134 GMT. It touched $1,315.27 on Tuesday, the lowest in more than a week. U.S. gold futures were up 0.2 percent at $1,326.90 an ounce.
Expectations the U.S. Federal Reserve will raise rates at next week's policy meeting have receded, putting pressure on the U.S. currency which when it falls makes gold cheaper for holders of other currencies.
"The big picture is the Fed rate hike, which is going to be the biggest factor for gold, so in the short-term markets will be looking at U.S. data," said Natixis analyst Bernard Dahdah.
"It's all about the opportunity cost of holding gold. Higher interest rates make it more expensive to hold gold, which has zero yield."
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Markets are pricing in just a 15 percent chance that U.S. interest rates will be hiked this month, according to CME FedWatch. Many now expect a rise in December after the U.S. presidential election.
Goldman Sachs puts the chances of a rate hike in December at 40 percent.
Investors also appear to have given up the idea of an imminent rise in U.S. rates as can be seen in holdings of gold in physically backed exchange-traded funds, which are down 1.7 percent at 56.27 million ounces since August 5.
On the technical front, initial resistance comes in around $1,330, near the 21-day moving average.
"Gold is approaching the important $1,300-$1,310 support zone, which has held incredibly well since the Brexit rally and will be a key focus for traders in the short term," said Alex Thorndike, senior precious metals dealer at MKS PAMP Group.
Spot silver was up 0.8 percent at $19.01 an ounce.
Platinum gained 0.5 percent at $1040.40. It fell more than 2 percent to touch a more than 2-month low of $1,026.10 on Tuesday. Palladium rose 0.9 percent to $657.60 after an 8-week low of $648.72 hit on Tuesday.
(Additional reporting by Nallur Sethuraman in Bengaluru; editing by Jason Neely)