* Strong U.S. inflation report followed by weak retail sales
* Dollar surrenders gains, Wall Street swings higher
* Other precious metals hit one-week highs
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl (New throughout, updates prices, market activity and comments, adds second byline, NEW YORK dateline)
By Renita D. Young and Jan Harvey
NEW YORK/LONDON, Feb 14 (Reuters) - Gold prices climbed nearly 2 percent on Wednesday, rebounding from early losses that followed stronger-than-expected U.S. inflation data, as the dollar surrendered gains and equities swung higher.
The dollar initially rose after the U.S. Labor Department report showed U.S. consumer prices increased more than expected in January, and traders bet the U.S. Federal Reserve would boost interest rates faster than previously forecast. FRX/
However, softer-than-forecast retail sales data and an immediate pullback in equities markets sparked concern that the Fed would struggle to raise rates quickly enough to offset inflation pressures.
Spot gold XAU= was up 1.7 percent at $1,351.81 per ounce by 1:37 p.m. EST (1837 GMT), after reaching $1,355.08, its highest since Jan. 26. U.S. gold futures GCv1 for April delivery settled up $27.60 per ounce, or 2.1 percent, at $1,358.
Bullion was on track for its strongest daily performance since May 2017. Inflation fears generally prompt investors to buy the precious metal.
"Gold investors are looking into gold as a hedge against inflation and higher inflation expectations are boosting an interest in gold," said Suki Cooper, precious metals analyst at Standard Chartered (LON:STAN) Bank.
U.S. stocks fell immediately after the inflation report, then rebounded and traded higher in the afternoon. In addition to the strong inflation numbers, market watchers noted a surprise drop in January retail sales. .N
"Given the weak retail sales report alongside (the inflation data), the markets are probably going to talk about stagflation, where you are getting stronger inflation but not really getting a stronger consumer," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
"Those two in tandem might be leading to this flattener in Treasuries, though retail sales are pretty volatile."
Stock markets, which scaled record peaks in recent months, slid sharply last week, dragging gold prices as investors sought refuge in the U.S. dollar.
Meanwhile, silver XAG= was up 1.9 percent at $16.86 an ounce after hitting a one-week high of $16.98. Palladium XPD= gained 1.8 percent to $1,002.25, earlier hitting a one-week high $1,004.60 high. Platinum XPT= rose 2 percent at $993.24, earlier hitting $998.80, its highest in nearly three weeks.
The platinum market is set for another surplus this year after recording oversupply of 110,000 ounces in 2017, Johnson Matthey (LON:JMAT) said in a report on Wednesday, though sister metal palladium is tipped for another deficit.