Gold was little changed in thin trade on Friday, heading for its biggest annual loss in more than 30 years as hopes of a global economic recovery and rallies in equities dent its appeal as an alternative investment.
Bullion has fallen more than 25 percent this year, hurt partly by the long-expected tapering of the U.S. Federal Reserve's bond-buying stimulus programme, which has been a key driver of gold's rally in recent years.
Gold hit an intraday low around $1,208 an ounce before standing at $1,210.46 by 0256 GMT, steady from Thursday. The precious metal touched record highs above $1,900 in 2011, when a worsening debt crisis in Europe sparked a buying rush.
"Sentiment I think is bearish for next year," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, adding that declines in exchange-traded funds holdings could potentially drag down prices.
"Gold may have to test at least $1,180 and then after that, $1,100. Let's see how the physical demand is and how the economy behaves."
U.S. gold eased 0.2 percent to $1,210.20 an ounce.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.19 percent to 804.22 tonnes on Thursday from 805.72 tonnes on Tuesday.
In terms of ounces, holdings slipped to 25,856,464.05 ounces from 25,904,686.51 -- their weakest since 2009.
Dealers noted physical buying from Chinese consumers on Friday, but demand from Indonesia and Thailand had eased in recent weeks because of the countries' weakening currencies.
Premiums for gold bars inched up to a high of $2 an ounce above spot London prices in Hong Kong, higher than $1.50 last week on some tightness at the end of the year as dealers awaited the arrival of fresh supply from Europe next month.
Premiums in Singapore, a centre for bullion trading in Southeast Asia, were steady at $1.50 an ounce, with dealers watching the political drama in Thailand.
Thailand's government rejected a call from the Election Commission (EC) on Thursday to postpone a February vote after clashes between police and anti-government protesters in which a policeman was killed and nearly 100 people were hurt.
"Indonesia has been quiet but it has exported a lot of gold in 2013 because of the weak currency," said a physical dealer in Singapore. "I guess for Thailand, we will have to wait and see. I don't think the protests will end unless there's a consensus."
In other markets, Asian markets were struggling to match the performance of Wall Street on Friday even as Japanese economic data impressed and the dollar tested the 105 yen barrier for the first time in five years.