(Adds comments and updates prices)
* Dollar regains some ground, yields steady near 1-week high
* Gold market is expected to be choppy to year-end - analysts
* Spot gold may retest support at $1,785/ounce - technicals
Dec 22 (Reuters) - Gold prices were stuck in a narrow trading range on Wednesday as investors headed into year-end holidays, with a steady improvement in risk appetite countering safe-haven demand fuelled by the rapidly spreading Omicron COVID-19 variant.
Spot gold was last down 0.1% at $1,786.58 per ounce by 0724 GMT, while U.S. gold futures fell 0.1% to $1,786.60.
The dollar index was up 0.1% at 96.585 after two days of losses, pressuring gold by making it more expensive for buyers holding other currencies.
Although Omicron concerns abound, the lack of overtly distressing symptoms provides some relief, which is a reason for a move towards riskier assets, said Stephen Innes, managing partner at SPI Asset Management.
U.S. Treasury yields were steady near one-week highs, weighing on gold as higher yields increase the opportunity cost of holding bullion, which pays no interest.
"With trading volume thin and major players away ahead of the year, the gold market is expected to be choppy ... Momentum is lacking and prices most likely consolidate with the comfortable range," Phillip Futures analyst Avtar Sandu said in a note.
Despite the number of rising COVID-19 cases, Asian share markets were broadly up on Wednesday as the risk appetite of global investors rises heading into year-end.
Spot gold may retest a support at $1,785 per ounce, with a good chance of breaking below this level and falling towards $1,773-$1,778 range, technical analysis showed.
Silver fell 0.1% to $22.48 per ounce, platinum fell 0.5% to $930.13, and palladium rose 0.5% to $1,801.25 (Reporting by Seher Dareen in Bengaluru; Editing by Subhranshu Sahu and Vinay Dwivedi)
