Gold edged down in Europe on Wednesday as a rise in the value of the U.S. dollar curbed interest in the precious metal as an alternative asset, and made it a more expensive buy for other currency holders.
Trading in Europe, the United States and some parts of Asia was thinned by the Christmas and New Year holidays, with many market participants away until Jan. 4.
Spot gold was bid at $1,092.35 (U.S.) an ounce at 1024 GMT, against $1,096.55 late in New York on Tuesday. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $4.80 to $1,093.30 an ounce.
The precious metal's decline is taking spot prices further from the record high of $1,226.10 an ounce they hit at the beginning of December after a wave of central bank gold buying.
"The bear pressure is certainly on the market now and the stronger dollar is curbing any recovery attempts by gold," said Pradeep Unni, senior analyst at Richcomm Global Services.
"The number of long speculators is slowly and steadily fading off and formidable resistances at the $1,107-1,110 zones are repeatedly being used as selling opportunities."
"Despite the low trading activity, a possible slide to $1,080-1,072 seems more likely in the coming sessions," he said.
The U.S. dollar gained against the yen, hitting a two-month high, and held its ground against the euro as it continued to benefit from the view the U.S. economy is on course to recover.
Going into the new year, currency traders are focusing on when the U.S. Federal Reserve is likely to start tightening monetary policy.
A spate of better-than-expected data in recent weeks has lifted expectations a rate rise may come sooner rather than later. If rates are lifted, it is likely to benefit the dollar, and consequently weigh on gold.
Traders Eye Data
Among other commodities, oil prices steadied near $79 a barrel as a decline in U.S. fuel stocks and optimism over the economic outlook countered the effects of the stronger dollar.
Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation. Traders will be watching economic data due later in the session for clues as to the next move in the currency and commodity markets.
Chicago's Institute of Supply Management releases its December index of manufacturing activity for December at 1445 GMT, with the Federal Reserve Bank of Kansas City putting out its manufacturing survey at 1600 GMT.
The U.S. Energy Information Administration will also unveil its weekly oil and oil products stockpile data at 1530 GMT.
Investment demand for gold was firm, with the world's largest bullion-backed exchange-traded fund, New York's SPDR Gold Trust reporting an inflow of just under one tonne on Tuesday.
Among other precious metals, silver was at $17.00 an ounce against $17.08. Platinum was at $1,462.50 an ounce against $1,462, and palladium at $391 against $385.50.
"Silver will look to gold for direction although chart support is anticipated around recent lows of $16.90/16.76," said TheBullionDesk.com analyst James Moore.
"Despite the risk of pressure on the platinum group metals in the short term, expectation physically-backed ETF products could soon be listed in the United States should limit substantial price weakness, as both investors and end-users look for dip buying opportunities," he added.