Gold edged lower on Wednesday, weighed down by a strong dollar, though some analysts said that bullion could receive support from European political risks in the coming months.
Spot gold was down 0.4 percent at $1,206.66 an ounce by 1320 GMT after dipping by 0.15 percent in the previous session. U.S. gold futures fell 0.4 percent to $1,207.
Gold has shed nearly 10 percent from a peak hit in the aftermath of the U.S. election two weeks ago, holding above key support around $1,200.
"It's been a pretty dreadful time for gold. Everything that's good for growth has been negative for gold," said Robin Bhar, head of metals research at Societe Generale in London.
The metal has been hit by expectations that the policies of U.S. president-elect Donald Trump will boost economic growth as well as strong U.S. data that has supported the case for an interest rate rise.
But with traders pricing in a 100 percent chance of a December rate increase, according to the CME Group's FedWatch Tool, gold's decline may be bottoming out, Bhar added.
"I suspect that maybe 70 percent of the rate rise is priced into the market, and when it comes through, you may have 'sell the rumour and buy the fact'," he said.
The U.S. Federal Reserve next meets Dec. 13-14.
Uncertainty surrounding Italy's constitutional referendum on Dec. 4 and French and German elections next year could support gold through safe-haven buying, Bhar said.
"Seasonally, as we move towards Christmas, New Year and Chinese New Year, that should see some physical support."
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced. The dollar was steady on Wednesday near a recent 13-1/2 year peak.
While Trump's victory has spurred safe-haven buying of physical gold in Europe, traditional bullion holders in the United States are standing pat.
Another analyst believes that gold is vulnerable to more losses in the short term.
"We suspect that the precious metal will be under further pressure, likely taking out $1,200 support in fairly short order," INTL FCStone analyst Edward Meir said in a note.
Silver fell 0.7 percent to $16.52 an ounce and platinum shed 0.2 percent to $934.95.
Palladium gained 0.2 percent to $741.30, having touched its highest since early June at $749.40 in the previous session.
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