PRECIOUS-Gold gains over 1%, spotlight on US-Iran ceasefire and CPI data

By Ashitha Shivaprasad and Anjana Anil

April 9 (Reuters) - Gold prices gained over 1% on Thursday as a weaker U.S. dollar lent support, while investors assessed the durability of a fragile ceasefire between Washington and Tehran and awaited U.S. Consumer Price Index data.

Spot gold XAU= was up 1.7% at $4,796.50 per ounce at 11:37 a.m. ET (1537 GMT), after hitting a near three-week high in the previous session.

U.S. gold futures > edged up 1% to $4,823.00.

The U.S. dollar index .DXY slipped. A softer dollar makes bullion more affordable for buyers using other currencies. USD/

"The weaker dollar has helped gold regain its footing, but there is caution in the market as participants try to interpret what the ceasefire means," said Bob Haberkorn, senior market strategist at RJO Futures.

"The ceasefire headlines were very bullish for gold, but prices have pulled back from recent highs as cracks show," he added.

Israel bombed more targets in Lebanon, which Tehran says must be included in the ceasefire, while there was no sign Iran had lifted its blockade of the Strait of Hormuz.

A breakdown in negotiations and a renewed flare-up in the war risk pushing up energy costs and inflation, which could force the Federal Reserve to keep rates higher for longer. This could in turn reduce the appeal of non-yielding gold, despite it being a traditional inflation hedge. O/R

Spot gold has dropped nearly 10% since the start of the U.S.-Israeli war against Iran on February 28.

Markets are also waiting for U.S. Consumer Price Index data for March, due to be released on Friday.

The Personal Consumption Expenditures index - the Fed's preferred inflation gauge - advanced 2.8% in the 12 months through February, in line with estimates, and likely rose further in March.

Spot silver XAG= gained 2.3% to $75.84 per ounce, platinum XPT= added 2.6% to $2,082.78 and palladium XPD= edged up 0.3% to $1,559.10.