Gold is heading for its best month since August, as the US dollar weakened and funds ploughed more money into exchange-traded funds (ETFs) backed by the metal.
The euro gained for a fourth day as the dollar declined against all its Group of Ten peers, bolstering the appeal of bullion as an alternative asset. Prices are up for a fifth session in six in the spot market, set for its biggest annual gain since 2010.
Meanwhile, global holdings in gold-backed ETFs expanded 6.3 tonnes last week after a 7.2 tonne build the prior week, according to data compiled by Bloomberg. Assets rose 14 per cent last year.
The strong bullish momentum is "largely due to US dollar weakness", said Mr Benjamin Lu, an analyst at Phillip Futures in Singapore.
The Federal Reserve's dovish monetary policy "has softened greenback prospects considerably while bolstering bullion's appeal", he added.
A gauge of the greenback is set for the biggest quarterly loss since the first three months of 2018.
After cutting rates three times last year, the Fed's rate-setting Federal Open Market Committee is expected to stay on hold through this year.
The central bank is also on watch this week to prevent any repo market disruption.
"Amid a low-trading environment, lower is the path of least resistance for the USD," said Mr Rodrigo Catril, a senior foreign exchange strategist at National Australia Bank in Sydney.
Global holdings in gold-backed ETFs expanded 6.3 tonnes last week after a 7.2 tonne build the prior week, according to data compiled by Bloomberg. Assets rose 14 per cent last year.
"Abundant USD liquidity is pushing short-dated US yields lower."
Spot gold rose 0.3 per cent to US$1,514.97 an ounce as of 1.51pm in New York on Monday, extending its December gain to 3.5 per cent, according to Bloomberg generic pricing. The metal was up 18 per cent last year.
The Bloomberg Dollar Spot Index fell to the lowest in about six months.
Comex gold for February delivery settled little changed at US$1,518.60 at 1.39pm in New York.
In the gold-options market, February US$1,525 calls were most actively traded, with 3,082 contracts changing hands by early afternoon.
Minutes from the Federal Reserve meeting last month will be released on Friday, with investors on the lookout for more colour on the thinking behind the unanimous decision to keep rates on hold after the three cuts last year, and on policymakers' apparent preference to keep them steady this year.
Still, Mr Lu said he expects that gold will "soften considerably" this year as investors ease up on havens and pivot towards interest-bearing assets amid rising US bond yields and robust risk appetites.
Silver and platinum climbed on the final Monday of the year.
Spot silver added 0.8 per cent, extending last year's gain to 16 per cent, and platinum rose 1.5 per cent, taking the annual advance to 21 per cent.
Palladium, which was up 0.1 per cent, has come out tops for annual performance by some distance, with a 51 per cent rally.