EDITED FOR PEOPLE JUST GETTING HERE

See #569 (comment) and #569 (comment), the warning can just be ignored. Command Line Tools works fine, you do not need the full Xcode.

See https://github.com/nodejs/node-gyp/blob/master/macOS_Catalina.md, here and here for more info.

Fix:

xcode-select --install # Install Command Line Tools if you haven't already.
sudo xcode-select --switch /Library/Developer/CommandLineTools # Enable command line tools

then just ignore the warning.

Alternatively if you want you can use the full Xcode.app (if you have it installed) with:

# Change the path if you installed Xcode somewhere else.
sudo xcode-select -s /Applications/Xcode.app/Contents/Developer

If your install is failing

There will be other errors nearer the end, almost certainly issues with the module you're trying to install or a dependency. Please report the error to that project.

If that doesn't work

Are you seeing this when you run node-gyp rebuild or npm install? If not then it's nothing to do with node-gyp, raise a bug with the project you're using.