* SPDR Gold Trust holdings at 1-1/2-month high * Dollar slips to one-week low * Silver hits highest level since February (Recasts, adds comments, updates prices) By Brijesh Patel May 18 (Reuters) - Gold prices extended gains on Tuesday, hitting their highest level in more than three-and-a-half months, as a weaker U.S. dollar and growing inflationary pressure bolstered the metal"s appeal as an inflation hedge. Spot gold was up 0.1% at $1,868.27 per ounce by 0314 GMT, after hitting its highest since Jan. 29 at $1,873.41 earlier in the day. U.S. gold futures were steady at $1,868.30. "Gold ETFs have actually started to pick up again this month, which is positive because the market is reading higher inflation, at least over the short term," said Stephen Innes, managing partner at SPI Asset Management. "If the dollar continues to weaken, gold could catch fire, but much of this in Asia is pretty muted. The real key here is how gold is going to perform to London open." The dollar index slipped 0.1% to hit a one-week low against its rivals, making gold less expensive for other currency holders. Holdings of SPDR Gold Trust , the world"s largest gold-backed exchange-traded fund, rose 0.7% to 1,035.93 tonnes on Monday, their highest since late-March. In the wake of rising prices in the United States, minutes of the Federal Reserve"s last policy meeting due on Wednesday are expected to provide further clarity on the central bank"s monetary policy outlook and policymakers" view on inflation. Dallas Fed President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year. "Prices of gold contracts have broken through a major resistance trendline sloping down from the $2,000 highs," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note. "If gold longs are able to convincingly push prices higher, it is very likely that bulls would gun for the $1,950 level." Elsewhere, silver jumped 0.8% to $28.40 per ounce, after hitting its highest since Feb. 2 earlier in the session. Palladium gained 0.4% to $2,911.63 and platinum climbed 0.1% to $1,241. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu) Our Standards: The Thomson Reuters Trust Principles.