Spot gold was down 0.1 percent at $1,237.51 per ounce, as of 0401 GMT, after having hit its lowest since Dec. 4 at $1,232.39 on Friday.
U.S. gold futures were little changed at $1,241.3 per ounce.
• Gold has not recovered yet from Friday's decline, said analyst Helen Lau of Argonaut Securities, adding that prices were moving on the strong dollar over the weekend.
Weaker-than-expected economic data out of China and Europe and fears of a possible U.S. government shutdown enhanced appeal for the U.S. currency, which has played the role of a safe-haven asset in recent times.
• The dollar index, which measures the greenback against other major currencies, was just below the 19-month high of 97.71 hit on Friday.
• Markets will closely watch the future trajectory of U.S. monetary policy at the Federal Reserve's Dec.
• "Markets will rally on the back of dollar weakness after the central bank signals a more dovish stance, but the advance will fall back quickly as global growth concerns reassert themselves," INTL FCStone analyst Edward Meir said in a note.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.
Spot gold is biased to break a support at $1,232 per ounce, and fall to a lower support zone of $1,224-$1,228, according to Reuters technical analyst Wang Tao.
• Meanwhile, hedge funds and money managers switched to
This was the first time gold speculators held a net long position since
• "Uncertainties of the trade war are still weighing on the market," said Dick Poon, general manager, Heraeus Metals Hong Kong Ltd.
"It is getting close to Christmas time, so it is getting super quiet in the market. Investors reduce their inventories as much as possible before the year ends."
• Among other precious metals, spot palladium gained to $1,238.20 per ounce.
• Silver declined marginally to $14.56 per ounce, while platinum fell 0.6 percent to $782.50 per ounce.
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The critical event markets will be focusing on next week will be a meeting of the Federal Open Market Committee. Policymakers are expected to hike interest rates another 25 basis points, but market watchers will be watching closely for clues on the pace of future hikes. Fed Chair Jerome Powell has suggested rates may be nearing a “neutral” level, and financial markets have been scaling back the number of rate hikes expected next year.
Those who are bullish tended to cite the potential for the FOMC to be more dovish than in the past. However, the gold bears cited recent dollar strength and technical-chart factors.
Eighteen market professionals took part in the Wall Street survey. There were seven votes, or 39%, for both higher and lower. The other four respondents, or 22%, called for gold to be sideways or else were neutral.
Meanwhile, 507 people responded to an online Main Street poll. A total of 291 respondents, or 57%, called for gold to rise. Another 115, or 23%, predicted gold would fall. The remaining 101 voters, or 20%, see a sideways market.
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“The stars haven’t really been aligned for gold this year. For most of the year, you had this ongoing U.S. dollar strength playing through. We’ve had bouts of volatility, which I quite like for gold, but the U.S. dollar hasn’t sold off,” Pepperston head of research Chris Weston told Kitco News.
But, the good news for gold is that things look very different next year, analysts pointed out, commenting that the U.S. dollar has likely peaked in 2018 and the yellow metal is expected to trade north of the critical $1,300-an-ounce resistance level next year.
Pepperston’s bullish outlook is a surge to $1,500 an ounce, the base-case scenario is a climb to $1,350 an ounce by the fourth quarter of next year, and the bear case is gold trading between $1,250 and $1,200.
Somewhere in the middle of the bullish scale is London Capital Group head of research Jasper Lawler’s forecast, which calls for gold to rise back up over the $1,300 level by mid-2019 and then climb higher and break through the $1,375 level.
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