Gold was little changed on Wednesday as thin liquidity and a firmer dollar capped price moves, although the metal remained on track to close the year lower for a third time in a row. The precious metal has lost nearly 10 percent of its value this year, largely on fears that higher US interest rates would hurt demand for non-interest-paying bullion.
Spot gold was steady at $1,069.40 an ounce by 0109 GMT, following a flat close overnight. Gold is positively co-related to oil as the metal is often seen as a hedge against oil-led inflation, while a stronger greenback makes dollar-denominated gold more expensive for holders of other currencies. Oil prices fell more than 1 percent early on Wednesday after jumping 3 percent in the previous session.
The outlook for gold does not look very bullish heading into the next year, with several traders and brokerages predicting a drop in prices to $1,000 or below early in 2016. Assets of SPDR Gold Trust, the top gold-backed exchange-traded fund, are near a seven-year low, while short positions on COMEX gold contracts are close to an all-time high.