* Paulson cut gold bets into SPDR fund while Soros rushes back
* U.S. inflation data (CPI) posts largest gain in 3 years
* Platinum/palladium ratio: http://link.reuters.com/fyg99v (Updates price, adds comment)
By Clara Denina
LONDON, May 17 (Reuters) - Gold edged lower on Tuesday, after better-than-expected U.S. data and gains in European stock markets which reduced the appeal of the precious metal often perceived as a refuge from riskier assets.
Spot gold XAU= fell 0.1 percent to $1,272.31 per ounce by 1340 GMT, while U.S. gold futures GCcv1 were also down 0.1 percent at $1,273.40.
"There is a little profit taking in gold because the shares market is higher," Societe Generale (PA:SOGN) analyst Robin Bhar said.
European shares hit a two-week high on Tuesday, bolstered by mining firms which tracked a rally in industrial metals, while the dollar was down 0.1 percent against a basket of six major currencies .DXY . MKTS/GLOB
A weaker U.S. currency makes dollar-denominated gold cheaper for holders of other currencies, while strong stock markets reduce gold's attraction as a safe haven.
Data on Tuesday showed U.S. consumer prices recorded their biggest increase in more than three years in April, pointing to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year.
"Everyone is really waiting to see whether the U.S. economy does pick up in Q2, as it often does, and the narrative over the Fed shifts again," Macquarie analyst Matthew Turner said.
Gold has rallied 20 percent this year on speculation the U.S. Federal Reserve has slowed its expected pace of rate increases on concerns about the volatility of global markets.
The Fed should consider raising rates at its June meeting, Richmond Fed President Jeffrey Lacker told the Washington Post in an interview published on Monday, saying inflation was moving towards 2 percent and labour markets had tightened. regulatory filings on Monday showed some influential investors, including billionaire financier George Soros, bought into gold through exchange-traded funds in the first quarter. who once called gold "the ultimate bubble", returned to the world's biggest gold exchanged-traded fund (ETFs) after a three year absence, buying 1.05 million shares in SPDR Gold Trust GLD (NYSE:GLD).P worth about $123.5 million.
SPDR Gold Trust's assets have been rising steadily this year and are at their highest since November 2013. GOL/ETF
But long-time gold bull John Paulson cut his bets on bullion. silver XAG= was unchanged at $17.14 per ounce, spot platinum XPT= was down 0.2 percent at $1,041.50 per ounce and spot palladium XPD= lost 1.3 percent to touch $582.70 an ounce.
The platinum/palladium ratio has reached its highest in about a month this week, as it resumes its slow climb higher after reaching its lowest since 2002 in October.
An ounce of platinum now buys 1.78 ounces of palladium, up from 1.64 ounces at the start of the year.