Gold inched up on Wednesday after hitting a 7-week low in the previous session, as the dollar pulled back from a 1-1/2-month high against a basket of currencies.

Fundamentals

* Spot gold had risen 0.3 percent to $1,275.10 an ounce by 0049 GMT. It touched its lowest since mid-August at $1,267.76 on Tuesday.

* U.S. gold futures for December delivery were also up 0.3 percent at $1,278 per ounce.

* The dollar on Wednesday shed 0.2 percent against a basket of major currencies after touching its best since mid-August on Tuesday.

* The three major U.S. stock indexes and the Russell 2000 posted record high closes for the second straight day on Tuesday, helped by gains in airlines.

* Japanese companies' inflation expectations eased slightly in September from three months ago in a worrying sign the economy continues to struggle with a deflationary mindset.

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