But the metal had its biggest weekly rise in two months as the dollar retreated and sliding oil prices hurt risk appetite.
Gold was up 2.5 per cent this week after Tuesday's big rally. Falling stock markets have prompted some investors to buy the metal as an alternative asset, while a drop in the greenback made dollar-priced bullion cheaper for holders of other currencies.
"When the equity markets dropped quite sharply, precious metals soared, so there is definitely still the link between equities and gold in particular (due to) risk appetite among market players," Commerzbank analyst Daniel Briesemann said.
"Some of the equity markets had a decent run this year. We don't expect this to be continued to the same extent next year, so this might give some tailwind to gold prices."
Spot gold was down 0.5 per cent at 1,221.66 dollars an ounce by 3:38 p.m. EST (2038 GMT), while U.S. gold futures for February delivery settled down 0.3 per cent at 1,222.50 dollars, but were up 2.7 per cent for the week.
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The spot market briefly fell as much as 1 per cent to 1,215.60 dollars after a survey showed U.S. consumer sentiment rose in December to a new eight-year high.
"What we're looking at here is better retail sales," said Eli Tesfaye, senior market strategist for RJO Futures in Chicago.
"These better numbers basically are going to bolster the case for the Federal Reserve to be more hawkish going forward.
That's never good news for gold."
The dollar index was down 0.4 per cent, and European stocks slid more than 2 per cent, with further declines in the price of oil hitting energy shares and political concerns over Greece also curbing risk appetite.
(READ MORE: Have you thought about investing in gold?)
European shares posted their biggest weekly loss since mid-2011, while U.S. stocks also fell, putting the benchmark S&P 500 on track for its first weekly decline in eight.
The improved sentiment toward gold showed in the holdings of the world's top bullion-backed exchange-traded fund, SPDR Gold Trust, which rose 0.13 per cent to 725.75 tonnes on Thursday, up nearly 5 tonnes this week.
That marks the second straight week of inflows and the biggest weekly increase in its holdings since early July.
Among other precious metals, silver was down 0.5 per cent at 17.00 dollars an ounce, while spot platinum fell 1.1 per cent to 1,224.50 dollars. Spot palladium was down 0.7 per cent at 810.30 dollars.