LONDON: Gold edged down on Monday, as the dollar steadied but prices remained near a three-week high after a surprise rate cut in China raised hopes demand for bullion in the top consumer would increase.

China cut interest rates unexpectedly on Friday to support the world’s second-biggest economy, and could reduce them again, according to sources.

Spot gold fell 0.2 per cent to $1,199.40 an ounce by 1522 GMT. It hit a three-week high of $1,207.70 on Friday. US gold futures were unchanged at $1,198.70 an ounce.

In the physical market, Chinese prices traded at a premium of $1-$2 an ounce on Monday, unchanged from the previous session. Traders are hoping the Chinese interest rate cut will revive appetite for gold jewellery, bars and coins.

Demand slid by more than fifth in the first nine months, according to the China Gold Association, after record buying last year, as consumers became wary of falling prices.

Among other precious metals, silver was up 0.2pc at $16.43 an ounce.

Published in Dawn, November 25th , 2014