PRECIOUS-Gold steadies as inflationary concerns counter firmer dollar

(Adds comment and updates prices)

* Gold attractive as hedge against political risk - analyst

* Focus on U.S. nonfarm payrolls data due on Friday

* U.S. dollar rises 0.1%

Oct 4 (Reuters) - Gold prices held steady below a one-week high on Monday as lingering concerns over higher inflation and a slowdown in economic growth countered pressure from a firmer dollar.

Spot gold was little changed at $1,759.11 per ounce by 0632 GMT, after hitting its highest since Sept. 23 at $1,765.54 earlier in the day. U.S. gold futures rose 0.1% to $1,760.20.

The dollar index was steady and rebounded from its lowest level since Sept. 29 hit earlier in the day, making gold more expensive for buyers holding other currencies.

Offsetting pressure from the stronger dollar were concerns over persistent inflation, with data on Friday showing euro zone inflation hit a 13-year high last month and elevated price spikes in the United States.

Harshal Barot, a senior research consultant for South Asia at Metals Focus, said gold’s downside remained protected because of inflationary pressures, especially given a surge in energy costs.

“What we’re seeing is that inflation isn’t going to be as short-lived as initially expected and this might start negatively impacting growth,” Barot said, adding it could also delay a tapering by the U.S. Federal Reserve, though that would ultimately hinge on upcoming economic data.

Gold is traditionally seen as an inflation hedge, although reduced central bank stimulus and interest rate hikes tend to push government bond yields up, translating into a higher opportunity cost for holding gold that pays no interest.

Also providing some support to the safe-haven metal were concerns over the broader economic impact of Chinese property developer Evergrande’s debt crisis.

“With gold near the lows of its recent range, it is attractive as a short-term hedge against potential political disruptions in Washington and elsewhere,” said Stephen Innes, managing partner at SPI Asset Management.

Investors now await U.S nonfarm payrolls data due on Friday.

Silver rose 0.4% to $22.60 an ounce. Platinum fell 0.5% to $967.45 and palladium dropped 0.5% to $1,910.40. (Reporting by Nakul Iyer in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)