* Dollar pulls back from 7-year high versus the yen
* Physical demand surges after Wednesday’s price tumble
* Platinum briefly dips to a discount to gold (Adds comment, NEW YORK to dateline, second byline, updates market activities)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 20 (Reuters) - Gold rose on Thursday on data showing rising U.S. inflation, and after the previous day’s 1-percent drop triggered renewed physical interest by price-sensitive Asian buyers.
Bullion investors focused on U.S. Labor Department data which showed underlying inflation pressures rose in October, even though that also bolstered expectations of a mid-2015 interest rate hike from the Federal Reserve.
The gold market also ignored other data that showed a strengthening U.S. economy, including rising existing home sales and lower weekly jobless claims.
Bullion dropped on Wednesday after a poll showed weaker support among Swiss voters for a referendum proposal that would force the central bank to boost its gold reserves.
Dealers said appetite for physical gold among Asian buyers surged after prices fell to a low of $1,175 an ounce.
“We have certainly seen physical demand pick up on dips over the last couple of weeks after gold’s aggressive sell-off,” said David Meger, director of metals trading at brokerage Vision Financial Markets in Chicago.
Spot gold was up 0.7 percent at $1,191.44 an ounce by 1:55 p.m. EST (1855 GMT), while U.S. gold futures for December delivery settled down $3 an ounce at $1,190.90.
Earlier this month it slid to a 4-1/2 year low at $1,131.85.
The dollar index eased on Thursday, but the currency held near a seven-year high versus the yen as investors bet that the Federal Reserve will start raising interest rates next year while the Japanese central bank maintains stimulative policies.
A stronger dollar tends to weigh on gold, which is priced in the U.S. unit.
Selling by gold funds resumed after a brief pause this week. The world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, said its holdings fell 0.3 percent to 720.91 tonnes on Wednesday.
Gold exports to China from Switzerland, a major trading and refining center, more than tripled to 42.5 tonnes last month, Swiss customs data showed.
Among other precious metals, platinum briefly slipped into a discount to gold for the first time since mid-October before recovering to trade at a premium of about $10 an ounce.
Platinum was up 1.7 percent at $1,202.50 an ounce, while palladium climbed 1 percent to $768 an ounce.
Silver was up 0.3 percent at $16.15 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Catherine Evans and Chizu Nomiyama)