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Gold futures on Tuesday were climbing toward their highest price since mid- November, with yields and the dollar subdued ahead of the new year.

February gold was trading up $9.20, or 0.5%, to reach $1,818 an ounce, heading to the highest settlement since Nov. 19, a day after slipping 0.2%.

Bullion, however, has been trading in a tight range since November as concerns about the omicron variant of coronavirus and uncertainty around the effectiveness of policies to combat inflation have buffeted markets.

Investors, in that environment, have been mostly buying government debt, driving yields lower. A weaker dollar has provided some support for purchasing precious metals which have traditionally been seen as a hedge against uncertainty and inflation.

"The subdued 10-year Treasury yield and the somewhat directionless dollar are supporting the precious metal's advances this week even as risk appetite recovers further," wrote Raffi Boyadjian, lead investment analyst at brokerage XM, in a daily note.

The 10-year Treasury note was down 1 basis point to around 1.47% while the dollar was trading about 0.1% lower to 96.021, as gauged by the ICE U.S. Dollar Index , which measures the currency against a half-dozen others.

Lower bond yields and a softer dollar can make assets such as gold and silver, which are priced in the currency and don't bear a coupon, more attractive to buyers seeking alternatives to government debt and other perceived havens.

Some commodity professionals are concerned that the outlook for precious metals will be hurt as the Federal Reserve moves quickly to tackle inflation by raising interest rates sooner than later. Projections from the Federal Reserve's last meeting earlier in December point to three benchmark interest-rate increases in 2022, after the central bank winds down its bond buying program, to try to slow inflation.

"When interest rates rise, the opportunity cost of holding the yellow metal also rises, eventually pushing its price down," wrote Naeem Aslam, chief market analyst at AvaTrade, in a Tuesday note.

Aslam speculated that the outlook for gold remains "bleak as reduced concerns related to the omicron variant would mean the Federal Reserve sticking to its decision to speed up its tapering process and execute interest rate increases as soon as March 2022."