Gold steadied at $1,077.40 (-0.30%) after two days of gains, which were generated by a relative weakness in the U.S. dollar. Nevertheless bullion's upward potential is limited due to concerns that higher interest rates in the U.S. will hit demand for the non-interest-paying precious metal. The Federal Reserve is likely to raise rates further in 2016.

Oil prices hit multi-year lows on Monday undermining gold's strength as the precious metal is often viewed as a hedge against oil-led inflation.