Gold prices edged higher last week as price was seen briefly testing the January 24, 25 highs near the 1357 handle.

However, the failure to close at this level prompted a pullback in gold prices by Friday’s close.

The gains in the precious metal came as investors took advantage of the weakness in the U.S. dollar.

The declines in the USD come about despite economic data suggesting that the Federal Reserve could well remain on track for three rate hikes this year.

The FOMC meeting minutes will be coming out this week which remains a key event risk for the precious metal.

The failure to close above the 1357 level which can be seen as a resistance level indicates the possibility of a short term decline in price.

This is also evidenced by the fact that the price action in the precious metal has been consolidating into a rising wedge pattern on a daily basis.

A breakout from the lower trend line of the rising wedge pattern could trigger further losses in the precious metal.

We expect that next week’s FOMC meeting could potentially spark a sell off in gold prices.

Thus, we could potentially expect some near term decline in the precious metals.

Watch for a breakout from the lower trend line which could see gold prices posting a correction.

We expect that the declines could be limited to 1303 region where support is yet to be tested.

Alternately, in the event that gold prices manage to surge past the 1357 handle with a convincing close, further gains cannot be ruled out.

But the fact that reversal to the upside is so strong keeps the downside risks alive.