Gold fell on Tuesday as the dollar rebounded towards its highest in more than a decade, after Federal Reserve Chair Janet Yellen's comments on the U.S. jobs market boosted bets on further interest rate hikes next year.
The U.S. currency's gains were strongest against the yen, which slid around 1 percent after the Bank of Japan kept monetary policy unchanged.
Spot gold was down 0.5 percent at $1,132.81 an ounce at 1035 GMT, while U.S. gold futures for February delivery were down $7.90 an ounce at $1,134.80.
"This morning's surge in the dollar to new 13-year highs on the DXY measure, largely on the back of yen weakening after the BoJ's decision to leave interest rate unchanged, has put the skids under gold once again," Mitsubishi analyst Jonathan Butler said.
The dollar rose, global stock markets added to gains and U.S. Treasury yields recovered early losses after Yellen sounded an optimistic tone about the U.S. labour market on Monday.
Gold has fallen 2.5 percent since the Fed hinted after its latest policy meeting last week that it would raise rates more quickly than expected next year, lifting the opportunity cost of holding non-yielding gold, while boosting the dollar, in which it is priced.
The metal is on track for its biggest quarterly drop in more than three years, after losing ground in the wake of the Nov. 8 U.S. election as the U.S. currency surged.
Dollar strength cancelled out any additional interest in gold as a hedge against political risk after a suspected terrorist attack at a Berlin Christmas market, and the fatal shooting of the Russian ambassador to Turkey at an Ankara art gallery on Monday.
"Gold has completely relinquished its safe-haven status for the time being," Marex Spectron said in a note. "(It) has removed itself from geopolitical news and is focused solely on economic news, which basically means the dollar."
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, said its holdings fell another 8.9 tonnes yesterday, its biggest one-day outflow since Dec. 1. The fund's holdings have fallen by 122 tonnes since the U.S. election.
Silver was down 0.7 percent at $15.87 an ounce, while platinum was 0.5 percent lower at $912.50.
Palladium fell for the fifth straight session, down 1 percent at $669.97. The metal earlier touched a low of $665.98, its weakest since Nov. 14.
(Additional reporting by Swati Verma and Nallur Sethuraman in Bengaluru; editing by Susan Thomas)