* Geopolitical risks could support gold
* Gold price expected to remain in narrow range (Updates prices)By Pratima DesaiLONDON, May 14 (Reuters) - Gold prices edged higher onMonday as the dollar retreated from a 2018 peak after subduedU.S. inflation data last week highlighted the prospect of fewerU.S. interest rate increases than previously expected this year.Spot gold was up 0.1 percent at $1,318.9 an ounce at1252 GMT, having touched $1,325.96 on Friday, its highest sinceApril 26. U.S. gold futures were down 0.1 percent at$1,318.8.A weaker U.S. currency makes dollar-denominated gold cheaperfor holders of other currencies -- a relationship used by fundsto generate buy and sell signals. Though the dollar eased on Monday, its performance against abasket of other major currencies touched 93.416 last week for again of more than 4 percent since April 17 and its highest levelsince December.
"Gold is dollar-driven but it is doing reasonably well giventhe dollar is generally stronger," said Macquarie commoditiesstrategist Matthew Turner.Further support could come from rising security risks in theMiddle East after the United States said it would withdraw fromthe 2015 international nuclear deal with Iran and reimposesanctions.However, gold is expected to remain in the narrow range inwhich it has been trading this year -- mostly between $1,300 and$1,350 -- unless supply or demand fundamentals changedramatically."Gold's trading range in the first four months between lowand high price was the lowest in percentage terms since it wasfixed to the dollar in 1971," Turner said.
An increase to U.S. interest rates, possibly in June at theFederal Reserve's next meeting, will weigh on gold, thoughanalysts say that would be unlikely to push gold significantlylower.
"Over the short term, and particularly during May, we seegold trading between $1,285 and $1,338 an ounce as continuedstrength in the dollar and rising rates pressure values lower,"said INTL FCStone analyst Edward Meir.Traders said that falling gold imports by India, a topconsumer, were also undermining sentiment. Silver was up 0.1 percent at $16.63 an ounce,platinum fell 0.2 percent to $920.00 and palladium slipped 0.2 percent to 994.25. (Additional reporting by Apeksha Nair in BengaluruEditing by David Goodman)
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