* 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)
By Renita D. Young and Zandi Shabalala
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 XAU= declined 0.1 percent at $1,324.40 per ounce by 1:36 p.m. EST (1736 GMT), earlier touching $1,330.02, its highest since March 7.
U.S. gold futures GCcv1 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 (LON:STAN) 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. 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. .DXY USD/
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. 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. 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 XAG= was barely changed at $16.53 per ounce.
Platinum XPT= was flat at $960.60 an ounce after touching $973.20, a one-week high, and palladium XPD= dropped 0.2 percent to $988.70, reaching a near two-week high earlier at $1006.30.
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