* Dollar drops to 18-month low vs yen
* SPDR fund sees inflow of 20.8 tonnes (Updates throughout, changes dateline from SINGAPORE)
By Clara Denina
LONDON, May 3 (Reuters) - Gold rose to around the $1,300-an-ounce on Tuesday as the dollar and European shares fell, triggering further investment in physically-backed gold funds.
The metal has rallied around five percent over the past few sessions to a 15-month high on Monday after the Federal Reserve's cautious stance towards higher U.S. rates, as well as a soaring yen, weighed on the dollar.
A weaker dollar makes gold cheaper for holders of foreign currencies.
Spot gold XAU= climbed 0.5 percent to $1,297.11 an ounce by 1005 GMT, after earlier hitting a session high of $1,302.00. It hit its strongest since January 2015 at $1,303.60 an ounce on Monday.
The dollar weakness and strength in the gold price rally have triggered a sharp increase in money flowing into the SPDR Gold Trust GLD , the world's top gold-backed exchange-traded fund (ETF).
Assets of the fund rose 20.8 tonnes to 824.94 tonnes on Monday in the biggest increase since Feb. 22. Holdings are at their highest since December 2013.
"The recent weakness in the dollar triggered a lot of bullishness in the gold futures market ... which can easily reverse if the Fed turns more hawkish about hiking interest rates," Julius Baer analyst Carsten Menke said.
"But as long as investors stay in the ETFs and we don't see selling from that side, I wouldn't expect prices to fall below $1,200."
Gold may consolidate in a range of $1,289-$1,304 for a day before rising again, Reuters technical analyst Wang Tao said. will be eyeing U.S. data this week to gauge the strength of the economy and its impact on the Fed's monetary policy.
Bullion is sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar.
The key data will be U.S. nonfarm payrolls due on Friday. The U.S. economy is expected to have added 200,000 jobs in April, slightly lower than March. non-farm payroll report this week may have a neutral effect on gold given that investors are confident that even if the figures are good, there would not be any move by the Fed (to hike rates) until the second half of this year," Wing Fung's To said.
Among other precious metals, silver XAG= was up 0.2 percent, after hitting a 15-month high of $18.0 on Monday.
Platinum XPT= climbed to a fresh 10-month high of $1,89.70 an ounce, while palladium XPD= fell 0.4 percent to $615.72.