Gold ticked higher on Tuesday on weaker equities, but gains were limited as the dollar was perched at a near-nine-year high versus a basket of major currencies, undermining the metal's appeal as a hedge.
Spot gold rose 0.5 percent to $1,188.10 an ounce by 0720 GMT. Asian shares were weaker on Tuesday, as political uncertainty in Greece made investors less willing to take risks in the final trading days of 2014.
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The dollar hovered near a 29-month high against the euro on Tuesday after a Greek vote triggered the dissolution of the country's parliament, while the dollar index was close to its highest since April 2006.
"The decline in stocks is triggering some bids for gold but the bigger influence on prices is still the dollar," said a precious metals trader in Singapore.
Trading volumes have been thin due to the Christmas and year-end holidays. Tuesday will be the last trading day of the year in Japan. Floor trading for CME Group's precious metals futures and options products will be closed on Jan. 1.
Gold fell 1 percent on Monday, and gained nearly 2 percent in Friday's session.
"The big moves in the last few sessions is probably because of the thin liquidity. Nothing fundamentally has changed in terms of dollar and interest rate outlook," said the trader.
Some physical buying in China helped support prices. Premiums in Shanghai were steady at about $4 an ounce on Tuesday.
For the year, gold is down about 1.5 percent, hurt by a stronger dollar and expectations of an interest rate hike in the United States. The recent plunge in oil prices have also hurt bullion's appeal as a hedge against oil-led inflation.
Gold slumped 28 percent in 2013 as investor demand waned on the back of a robust U.S. economy and better-yielding stocks. Many analysts have forecast more declines in gold prices.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, held near a six-year low, reflecting bearish sentiment in the market.
In the short term, investors are focussed on developments in Greece that could trigger safe-haven bids for bullion.
Greece heads to an early general election next month after parliament rejected Prime Minister Antonis Samaras's nominee for president on Monday, throwing the country into a new period of political turmoil just as it emerges from economic crisis.