* Geopolitical risks could support gold
* Gold price expected to remain in narrow range (Updates prices)
By Pratima Desai
LONDON, May 14 (Reuters) - Gold prices edged higher on Monday as the dollar retreated from a 2018 peak after subdued U.S. inflation data last week highlighted the prospect of fewer U.S. interest rate increases than previously expected this year.
Spot gold XAU= was up 0.1 percent at $1,318.9 an ounce at 1252 GMT, having touched $1,325.96 on Friday, its highest since April 26. U.S. gold futures GCcv1 were down 0.1 percent at $1,318.8.
A weaker U.S. currency makes dollar-denominated gold cheaper for holders of other currencies -- a relationship used by funds to generate buy and sell signals. FRX/
Though the dollar eased on Monday, its performance against a basket of other major currencies touched 93.416 last week for a gain of more than 4 percent since April 17 and its highest level since December.
"Gold is dollar-driven but it is doing reasonably well given the dollar is generally stronger," said Macquarie commodities strategist Matthew Turner.
Further support could come from rising security risks in the Middle East after the United States said it would withdraw from the 2015 international nuclear deal with Iran and reimpose sanctions. gold is expected to remain in the narrow range in which it has been trading this year -- mostly between $1,300 and $1,350 -- unless supply or demand fundamentals change dramatically.
"Gold's trading range in the first four months between low and high price was the lowest in percentage terms since it was fixed to the dollar in 1971," Turner said.
An increase to U.S. interest rates, possibly in June at the Federal Reserve's next meeting, will weigh on gold, though analysts say that would be unlikely to push gold significantly lower.
"Over the short term, and particularly during May, we see gold trading between $1,285 and $1,338 an ounce as continued strength in the dollar and rising rates pressure values lower," said INTL FCStone analyst Edward Meir.
Traders said that falling gold imports by India, a top consumer, were also undermining sentiment. XAG= was up 0.1 percent at $16.63 an ounce, platinum XPT= fell 0.2 percent to $920.00 and palladium XPD= slipped 0.2 percent to 994.25.