LONDON: Gold steadied on Monday as the dollar slipped, but higher interest rates in the United States weighing on investor demand and a weak physical market are expected to pressure prices of the precious metal.

Spot gold was up 0.2 per cent at $1,243.07 an ounce at 1201 GMT, after marking the lowest since Dec. 12 at $1,236.58 on Friday. US gold futures were 0.2pc higher at $1,243.5 an ounce. A lower US currency makes dollar-denominated gold cheaper for holders of other currencies, which could boost demand.

The Federal Reserve last month raised its benchmark overnight lending rate 25 basis points to 1.75-2.0pc. Expectations are for another two rate rises this year and three in 2019. Gold does not earn any interest or dividends and costs money to store and insure.

“While interest rates were zero there was no real cost to holding gold, it was just like holding cash, now there is a cost,” said Matthew Turner, analyst at Macquarie.

India’s gold imports fell for a sixth month in June to 44 tonnes as a drop in the rupee lifted local prices to a near 21-month high, curtailing demand. “Indian and China retail consumption has been hindered by depreciating local FX,” Citi analysts said in a note. “Investors may favor gold again, especially if trade friction rises further and becomes a more sizable threat to economic growth and to the decade long equity market bull run.”

Silver was down 0.1pc at $15.77 an ounce, after hitting a seven-month low at $15.67 on Friday. Palladium was unchanged $937.00 and platinum slipped 0.1pc to $824.8 an ounce.

Published in Dawn, July 17th , 2018