Gold traded flat around $1,200 an ounce on Tuesday as activity slowed before Christmas, while signs of a steady U.S. economic recovery could deter investor interest as the metal heads for its biggest annual loss in 32 years.
U.S. economic data on Monday showed consumer spending rose in November at the fastest pace since June, while consumer sentiment hit a five-month high heading into the year-end.
The numbers propped up global equities, with Japan's Nikkei index hitting a six-year closing high, while reinforcing convictions that the Federal Reserve will continue to pare its quantitative easing (QE) stimulus.
"The broad consensus is that 2014 is going to be a better year for the global economy," Macquarie analyst Matthew Turner said.
"There's less risk of shocks because the euro zone crisis seems to have stabilised, some of the emerging market concerns seem to have faded, the U.S. is reducing QE and inflation is going to remain low," he added. "Without a major shock, investor demand (for gold) seems unlikely to pick up."
Spot gold was up 0.1 percent at $1,200.00 an ounce by 1030 GMT, while U.S. gold futures for February delivery were up $1.90 at $1,198.20.
Bullion fell to a six-month low of $1,185.10 on Friday after the Fed said it would begin tapering its $85 billion in monthly bond purchases next month, before recovering slightly.
Years of increased central bank liquidity and record-low interest rates encouraged investors to put money into non-interest-bearing assets and bolstered gold's rally to an all-time high of $1,920.30 an ounce in 2011.
The metal has fallen 28 percent this year, putting an end to 12 straight years of growth.
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 8.40 tonnes to 805.72 tonnes on Monday - the lowest in nearly five years.
"It is clear in our view that gold can expect little in the way of support from Western investment markets," HSBC said in a note.
"Investors continue to lighten long positions, exit the gold exchange-traded funds or go outright short."
On the physical side, premiums for China's 99.99 percent purity gold traded on the Shanghai Gold Exchange climbed to $20 an ounce from Monday's $16, indicating that sub-$1,200 price levels were stoking demand.
However, volumes traded on the exchange were about 12 tonnes - the lowest in a week.
Silver fell 0.3 percent to $19.37 an ounce. Spot platinum was up 0.2 percent at $1,325.00 an ounce, having fallen to its lowest since early July at $1,309.75 on Thursday. Spot palladium rose 0.1 percent to $693.25 an ounce.