Spot gold rose 0.2 percent to $1,320.77 an ounce at 0058 GMT, having hit its highest since Sept. 15 at $1,321.33 earlier in the session.
U.S. gold futures were up 0.5 percent at $1,322.40 an ounce.
The dollar index fell to a more than three-month low Tuesday on expectations of a slower pace of interest rate hikes by the U.S. Federal Reserve.
The greenback posted its biggest annual drop since 2003 in 2017, helping to lift gold to an annual increase of more than 13 percent. Bullion surged $55 an ounce in the last three weeks of 2017 alone.
Gold is highly sensitive to rising U.S. interest rates because it increases the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Technical analysts warned that gold’s rally is looking overdone in the short-term.
Key factors for the bullion market this year will be how quickly central banks normalize interest rates, how much further the equities rally goes, the longer-term impact of U.S. tax reforms, and when inflation will pick up, Mitsubishi analyst Jonathan Butler said.
Spot palladium jumped to a record high on Tuesday at $1,096.50 on fears of short supplies after soaring 57 percent in 2017. It was last up 0.2 percent at $1,094 an ounce early Wednesday.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14 percent to 836.32 tonnes on Tuesday from 837.50 tonnes on Friday.
India’s gold imports surged 67 percent in 2017 from the previous year to 855 tonnes as jewelers replenished inventory amid a rebound in retail demand, provisional data from precious metals consultancy GFMS showed.
Spot gold may break a resistance at $1,326 per ounce and rise towards the next resistance at $1,380 in three months, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.
Asian stocks struck a fresh decade high on Wednesday as risk appetites were whetted by a bevy of upbeat manufacturing surveys that confirmed a synchronized upturn in world growth was well under way. Source: Reuters