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Spot gold fell 0.2 percent to $1,344.20 per ounce at 0107 GMT, while U.S. gold futures for June delivery dipped 0.2 percent to $1,347.50 per ounce.
The dollar index, which measures the greenback against a basket of currencies, was little changed at 89.556, after gaining 0.1 percent overnight.
The index touched a three-week low of 89.229 on Tuesday before pulling back on stronger-than-expected March U.S. housing starts and steady industrial production figures.
• Technically, the gold bulls have the overall near-term technical advantage as prices are not that far below the recent highs. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,375.50. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the April low of $1,322.60. First resistance is seen at this week’s high of $1,353.50 and then at $1,362.60. First support is seen at today’s low of $1,340.20 and then at $1,335.00. Wyckoff's Market Rating: 6.5
• Be patient when it comes to gold, says one analyst, projecting a rally in the second quarter of 2018, led by strong physical demand and weaker U.S. dollar.
“The resilience of gold prices in spite of the substantial wave of speculative selling since mid-March (~71 tonnes, corresponding to a 17% drop in net long spec positions) is encouraging in so far as it suggests the presence of buying pressure elsewhere in the market (e.g. physical demand),” Boris Mikanikrezai, precious metals analyst at FastMarkets, wrote in a Seeking Alpha post on Monday.
Mikanikrezai is very optimistic when it comes to gold price outlook for the near term.
• Inflation is the second key element pushing the yellow metal higher, with price pressures estimated to increase, led by oil strength and tight labor market. And the third element for the bullion is the ballooning U.S. deficit in light of this year’s fiscal stimulus.
Mikanikrezai summed up that all of the above factors will continue to weigh on the U.S. dollar and boost gold prices.
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