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   Gold prices retreated on Wednesday from a more than one-month peak hit in the last session, as a stronger U.S. dollar and increased appetite for riskier assets depressed sentiment.

Spot gold was down 0.8% to $1,791.41 per ounce at 1327 GMT, while U.S. gold futures dropped 1.1% to $1,791.20.

"The main market driver is the decline that was seen on the euro-dollar," said Carlo Alberto De Casa, market analyst at Kinesis. "The dollar is strengthening and this is not the best thing for gold."

The dollar index held near a one-week high that lifted gold's cost for buyers holding other currencies, while European shares rose for a third session, hovering near an all-time high hit last month.

Investors are waiting to see if the U.S. Federal Reserve will hike interest rates three times in the coming year, De Casa said, adding that central bank policies would also be a market driver in 2022.

Higher rates increase bond yields, making non-yielding bullion less attractive.

Gold prices are on track for their biggest yearly decline since 2015, having fallen nearly 5% so far.

"Gold's annual decline this year was largely due to the surging U.S. dollar, propelled by bets that inflation would force the Fed to lean hawkish," said Han Tan, chief market analyst at Exinity.

Bond markets remain circumspect and have yet to be convinced that the Fed can deliver its hawkish pivot without derailing the U.S. economic recovery, Tan said, adding that if Treasury yields rose as expected in 2022, that should erode the appeal of bullion.

Spot silver fell 1.5% to $22.65, platinum dropped 1.4% to $962.45 and palladium shed 1.1% to $1,966.74.