Gold prices climbed for a third straight session on Tuesday, helped by a weaker U.S. dollar and lower Treasury yields on expectations that the Federal Reserve will lower interest rates next year.
Spot gold gained 0.5% to $2,062.71 an ounce by 1224 GMT, having hit a more than two-week high of $2,070.39 in the previous session. U.S. gold futures rose 0.2% to $2,073.90.
Trading was thin on the day after Christmas, with several markets closed for public holidays and trading expected to remain muted across the shortened week.
"Markets are holding on to hopes that the Fed will indeed lower its benchmark rates in the new year, allowing gold to build on back-to-back weekly gains," said Exinity Chief Market Analyst Han Tan.
"Spot gold should find adequate reasons to remain supported above the psychologically important $2,000 level, as long as the Fed can stay the course with its intended rate cuts next year."
Data released on Friday showed U.S. prices fell in November for the first in more than three and a half years, further slowing inflation and boosting expectations of a Fed interest rate cut next March.
Traders are now pricing in an 89% chance of a rate cut by the U.S. central bank in March, according to the CME FedWatch tool.
The dollar index hovered near a five-month low while the benchmark U.S. 10-year bond yield edged lower.
Lower U.S. interest rates increase the appeal of non-yielding bullion and weaken the U.S. currency, making dollar-priced gold more attractive for those holding other currencies.
In other precious metals, spot silver rose 0.7% to $24.3402 an ounce while platinum lost 0.1% to $969.69 and palladium fell 0.4% to $1,197.79.
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