Gold hit a two-week high on Friday on a weaker dollar and was set to close 2016 more than 9 percent higher, snapping three years of declines.
Spot gold was down 0.6 percent at $1,151.91 an ounce, having hit its highest since Dec. 14 at $1,163.14.
U.S. gold futures for February delivery settled to $1,151.70 an ounce.
In the first half of 2016, investors increased gold exposure as the Federal Reserve showed caution on raising interest rates due to concerns about global growth, while Britain's vote to leave the European Union curbed appetite for risk and pushed the metal to a two-year high in July.
But gold prices fell more than 8 percent in November, on higher U.S. Treasury yields after Donald Trump's election win led to speculation his commitment to infrastructure spending would spur growth.
Bullion then hit a 10-month low on Dec. 15 as solid U.S. economic data gave the Fed the confidence to raise rates for the first time in a year. The central bank signalled three more increases next year from the previous projection of two.
"In 2017, we could see more weakness in the gold price because of the three projected rate increases by the Fed, which would lead to a stronger dollar," said Peter Fertig, owner of Quantitative Commodity Research.
"On the other hand, though, uncertainty about political alliances between U.S. President-elect Trump and international players could create some geopolitical fractures, which would be positive for gold."
The precious metal is often seen as a hedge against geopolitical risks.