Gold prices inched lower on Monday in thin trading, as rising yields on expectations of higher interest rates countered weakness in the U.S. dollar.
Spot gold last rose 0.02% to $1,787.60 per ounce, while U.S. gold futures settled down 0.1% to $1,797.
"We're just seeing a quieter day. We're starting to see some pre-holiday trading set in and the gold and silver traders are looking for a fresh fundamental input after recent central bank data," said Jim Wyckoff, senior analyst at Kitco Metals.
U.S. Treasury yields rose on Monday, while the dollar eased. Higher interest rates and bond yields increase the opportunity cost of holding the non-yielding bullion.
U.S. Federal Reserve Chair Jerome Powell said last week the central bank will deliver more interest rate hikes next year. Other major central banks have also signalled the same.
Prices could trade sideways to higher into the end of the year, with some early bargain hunting in the gold market, once bigger institutions and funds start to make some new purchases, Wyckoff added.
In top gold consumer China, COVID-19 is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai.
However, the government said it would step up measures to stabilise its economy amid damage from COVID-19.
"You're going to need to see an uptick in economic activity in China in order to spark some of the industrial metals," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.