Gold prices rose on Tuesday as the dollar fell to near three-year lows, but an end to the uncertainty created by a three-day US government shutdown capped gains. Gold was mostly unaffected by the shutdown in the previous session, trading in a tight range. Spot gold was up 0.2 percent at $1,336.56 an ounce at 1526 GMT after touching a one-week high of $1,338.46, while US gold futures for February delivery climbed 0.3 percent to $1,336 an ounce.
"Dollar is mostly weakening and that has continued to be the number one supporter of gold," FOREX.com analyst Fawad Razaqzada said, adding the robust performance of the euro and the pound had pushed gold higher in recent weeks. The US government shutdown had impacted the dollar, but was largely ignored by gold, Razaqzada said.
The dollar index, which measures the greenback against a basket of six major currencies, fell 0.3 percent to a low of 90.347. This was close to a three-year low hit last week. A weaker greenback makes dollar-denominated assets such as gold cheaper for holders of other currencies.
The US Senate voted on Monday to pass a temporary spending plan through Feb. 8 to end the government shutdown. Equity markets have since gained, with Wall Street's main indexes surging to record highs.
Gold should see a first support level of $1,331 an ounce, with initial resistance expected at the recent highs of $1,343 and closely followed by the psychological $1,350 mark, MKS PAMP Group trader Tim Brown said in a note. "A consolidation above that level could be the signal for a push higher," he said.
The market is also keeping an eye on an expected US interest rate increase in March, which could present a risk to gold. "The anticipation of a March hike could act as additional weight for gold, although given this is now largely anticipated, the downside risks should be limited and gold's reaction function is likely to be asymmetric," UBS said in a note.
The US economy is likely to grow in 2018 at its fastest pace in three years, fuelled by the biggest tax overhaul since the 1980s, according to a Reuters poll of more than 100 economists. Faster economic growth in the world's largest economy would increase the likelihood of interest rate rises and dent the appeal of non-interest yielding bullion.
In production, China National Gold Group produced a record 42.42 tonnes of gold in 2017, state-run news agency Xinhua reports from the company's annual meeting. Among other precious metals, platinum was 0.7 percent lower at $988.50 an ounce, down from a more than four-month high touched in the previous session.
Silver was down 0.6 percent at $16.91 an ounce. Palladium was 0.9 percent lower at $1,088 an ounce.