Shu said gold was seeing some support from buying by Chinese jewellery makers ahead of an early Spring festival next year.
Spot gold was down 0.2 percent at $1,167.80 an ounce by 3:03 p.m. EDT. It touched $1,157 an ounce on Monday, its lowest since Feb. 5.
U.S. gold futures, which also marked a 10-month low in the prior session, settled for February delivery $1,170.10 per ounce.
"The expected increase in key interest rates is largely taken into account in current prices. However, we do not exclude a drop of the gold price to $1,150 per ounce," Heraeus Metals wrote in a note.
Bullion is highly sensitive to rising interest rates, which make the non-yielding asset less attractive while boosting the dollar, in which it is priced.
U.S. services sector activity hit a one-year high in November, with a surge in production boosting hiring, further evidence of strength in the economy that clears the way for the Federal Reserve to raise interest rates next week.
Interest rates futures implied traders saw a 93-percent chance the Fed would raise rates by a quarter point to 0.50-0.75 percent next week, CME Group's FedWatch showed.