Gold prices firmed on Tuesday as a dip in the U.S. dollar and risks posed to global economic growth from a surge in the Omicron variant cases burnished the metal's safe-haven appeal.

Spot gold was up 0.4% at $1,795.70 per ounce, as of 1017 GMT, and U.S. gold futures GCv1 gained 0.2% to $1,797.90.

While a lower U.S. dollar has helped gold, "markets are still reluctant to send spot prices significantly higher, knowing that Treasury yields could yet surge with U.S. Federal Reserve rate hikes looming next year," said Han Tan, chief market analyst at Exinity.

"However, the precious metal could catch fresh bids in 2022 if inflation expectations stay stubbornly elevated while nominal yields remain suppressed."

The dollar index recouped some losses overnight, but traded slightly lower, making bullion cheaper for overseas buyers. 

"While the (recent) announcement of the Fed's tapering was slightly negative for gold, it has seen some support due to worries over the Omicron variant," said Ajay Kedia, director at Kedia Commodities in Mumbai. 

Bullion is often considered a hedge against big spikes in consumer prices, but interest rate hikes may curb inflationary pressures while also reducing the appeal of non-yielding gold.

European shares rebounded after a selloff in the previous session, but concerns about the Omicron coronavirus variant still lingered amid tighter curbs in Europe and elsewhere that threatened to swamp the global economy ahead of the New Year.

However, "gold investors lack the stomach for any sort of losses still, as evident by recent rapid retreats on rallies above $1,800," said Jeffrey Halley, senior market analyst at OANDA, adding it lacked the momentum to break out of current range-bound trading.

Spot silver climbed 1.8% to $22.64 per ounce, platinum was up 1.1% at $942.49, and palladium jumped 4.4% to $1,825.50.

(Reporting by Bharat Govind Gautam and Seher Dareen in Bengaluru; Editing by Sherry Jacob-Phillips) ((BharatGovind.Gautam@thomsonreuters.com; +91-80-6182-3021/ 3590 (If within U.S. call 651-848-5832 );))