Gold slips but stays above $1,200

London : Gold inched lower as the dollar firmed yesterday, reversing some of the previous session’s gains which came after the US Federal Reserve chairman reiterated the central bank’s intention to raise interest rates further, albeit at a gradual rate. Spot gold was down 0.2 percent at $1,204.76 per ounce at 1116 GMT while US gold futures were down 0.2 percent at $1,210.60 an ounce.

Fed chairman Jerome Powell’s remarks on Friday did not change market expectations for further monetary tightening despite opposition from President Donald Trump. But the market interpreted Powell’s speech as dovish after he said a gradual approach to raising rates remained appropriate to protect the US economy, keep job growth strong and inflation under control. That pushed gold up 1.7 percent on Friday in its biggest one-day percentage gain since May 2017.

But prices remained capped as higher rates, even if they come at a gradual pace, raise the opportunity cost of holding gold, which can be costly to store and insure. “Our reading is that we still expect two more hikes this year and that should be the important thing near term for gold... next year the Fed is still likely to continue hiking,” said Danske Bank senior analyst Jens Pedersen. Among other precious metals, spot silver was down 0.2 percent at $14.760 an ounce, while platinum was down 0.4 percent at $787. Palladium was flat at $936 an ounce after touching a one-month high of $940.50 earlier in the session.