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Gold edged lower on Monday as investors nervously eyed the U.S. Federal Reserve's last policy meeting of the year to gauge whether the central bank would stick to its monetary stimulus.
Silver slipped after data showed that growth in activity in China's vast factory sector slowed to a three-month low in December.
Volumes, however, were thin as traders waited for the outcome of the Fed meeting before taking any big positions.
"We suspect that the central bank will likely not do anything at its meeting, but will likely use the occasion to telegraph its intentions of an imminent move," INTL FCStone analyst Edward Meir said.
"This will likely set up a weaker tone in gold heading into year-end, with a good chance that we could take out our 2013 lows in the process."
Gold has lost more than a quarter of its value this year - its first annual decline in 13 years, as investors channel money into riskier assets such as equities from safe-haven gold.
Prices could come under further pressure if the Fed decides to taper its $85 billion monthly bond purchases, denting the precious metal's appeal as a hedge against inflation.
Fed policymakers gather for the last time in 2013 for a two-day policy meeting that concludes on Wednesday.
Chairman Ben Bernanke said in June the Fed is expected to begin slowing the pace of bond purchases later this year and would likely end the program by mid-2014. However, in recent meetings officials have stressed the need for a strongereconomy, leaving investors in the lurch about the timing.
In the physical markets, buying was quiet as consumers were hoping prices would drop further this week after the Fed meet.
Demand in the second half of this year has paled in comparison to the first half, when gold prices fell sharply over a short period of time attracting buyers worldwide.
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