Gold prices edged down on Wednesday after hitting a 3-1/2-month high, as the dollar recovered from its lows and technical indicators pointed to a short-term correction. Spot gold fell 0.4 percent to $1,312.35 an ounce at 0257 GMT. The precious metal earlier hit $1,321.33, its highest level since September 15. US gold futures were mostly unchanged at $1,315.60 an ounce. "Relative strength index shows the metal at overbought levels, which may lead to short term selling," ScotiaMocatta analysts said in a research note.

The 14-day relative strength index (RSI) for spot gold 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 said.

"At this moment we are expecting some kind of inflationary expectations. People are more optimistic with stock rally are also expecting returns in commodities including gold," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. Spot gold may break a resistance at $1,326 per ounce and rise towards the next resistance at $1,380 in three months, according to Reuters technical analyst Wang Tao.Reuters

Copyright Business Recorder, 2018