Gold prices edged down today after hitting a three-and-a -half-month high, as the dollar recovered from its lows and technical indicators pointed to a short-term correction.
Spot gold fell 0.4% to $1,312.35 an ounce early morning UK time, having earlier hit $1,321.33, its highest level since Sept 15.
U.S. gold futures were mostly unchanged at $1,315.60 an ounce. The 14-day Relative Strength Index (RSI) for spot gold had touched 75 on Tuesday, it highest since September 2017.
An RSI above 70 indicates a commodity is overbought and could lead to a price correction.
Gold’s medium-term outlook appeared positive, analysts told Reuters. “At this moment we are expecting some kind of inflationary expectations.
“People are more optimistic about a stock rally and are also expecting returns in commodities including gold,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
He added: “We should tap the short-term opportunities to go long as gold has crossed $1,300 with a momentum. It may act as a support, while $1,340 could be an immediate resistance level and we might reach $1,400 in the first quarter this year.”
According to Reuters technical analyst Wang Tao, spot gold may break a resistance at $1,326 per ounce and rise towards the next resistance at $1,380 in three months.