Gold holds above $1200

SINGAPORE, Dec 2 (Reuters): Gold slipped on Tuesday on worries a strong dollar and volatile oil markets could undermine an overnight rally that lifted the yellow metal sharply away from four-and-a-half-year lows.

Spot gold traded in a $80 range on Monday, first falling to $1,142.91 an ounce after Switzerland voted against a proposal to boost its gold reserves, and then rallying to $1,220.99 as oil prices recovered.

"The market was overtly short but then the move higher also looks overdone," said a precious metals trader in Hong Kong.

The dollar outlook continues to be strong and oil prices could fall again, both hurting gold, the trader noted.

"I think gold is going to carry on being volatile for the rest of the year."

Spot gold had dipped 0.5 per cent to $1,204.49 an ounce by 0339 GMT, after gaining nearly 4 per cent on Monday, its biggest one-day jump since September 2013.

US gold futures fell 1 per cent on Tuesday, while silver futures also gave back some gains after sharp moves higher in the previous session. Platinum and palladium were lower as well after choppy trade on Monday.

Bullion has fallen along with oil in recent sessions on expectations that weaker oil prices could mean less inflationary pressures. Gold is seen as a hedge against rising prices.

But crude oil jumped as much as 5 per cent on Monday,  rebounding from five-year lows with their biggest daily gain since 2012, boosting gold. It fell again on Tuesday.

Gold's outlook will depend in the near term on the dollar and oil direction, according to an HSBC research note.