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• 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 $1,312.71 an ounce at 0257 GMT. The precious metal earlier hit $1,321.33, its highest level since Sept. 15.

• U.S. 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.

• The dollar index, in which the gold is priced, was up 0.1 percent at 91.946 after falling to a more than three-month low Tuesday.

• The greenback posted its biggest annual drop since 2003 in 2017, helping gold to an annual increase of more than 13 percent. Bullion surged $55 an ounce in the last three weeks of 2017 alone.

• 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.

• “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.”

• Spot gold may break a resistance at $1,326 per ounce and rise towards the next resistance at $1,380 in three months, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

• Among other precious metals, spot palladium fell 0.6 percent to $1,086.30 an ounce, after hitting a record high on Tuesday at $1,096.50

• Spot silver fell 0.5 percent at $17.10 an ounce, after hitting a six week high at $17.21 earlier in the session.

• Spot platinum fell 0.8 percent to $935.74 an ounce.