A weaker dollar can stimulate demand for gold, making the precious metal cheaper for holders of other currencies. Also weighing on the dollar were the minutes from the latest Federal Reserve meeting, showing policymakers were concerned about low inflation and could be wary of raising interest rates rapidly.
"It's fairly safe to say markets are not all that convinced that well get as many rate hikes as some people are speculating," said Bart Melek, head of commodity strategy at TD Securities in Toronto.
Gold is highly sensitive to rising interest rates because they tend to strengthen the dollar and push U.S. bond yields higher, reducing the appeal of non-yielding bullion. Jerome Powell, the nominee to replace Janet Yellen as Fed chair next year, is due to appear before Congress on Tuesday.
"This confirmation hearing might be seen as a risk-on environment; a positive for gold," said Josh Graves, senior commodities strategist at RJO Futures in Chicago.
Also on Tuesday, Trump will meet with Senate Republicans to discuss tax reform legislation that could accelerate U.S. economic growth.
"If we see finally some sort of movement in this area, that could reignite the 'Trumpflation' trade, risk assets could go to the races and we could see a pullback in gold as a risk hedge," Mitsubishi's Butler said.
On the technical side, gold broke through fibonacci resistance at $1,295.40 and momentum indicators suggested that gold prices would continue to rise, ScotiaMocatta analysts said in a note. Gold options on the December contract were set to expire on Monday.
Among other precious metal prices, silver was up 0.5 percent at $17.06 an ounce, platinum advanced 0.6 percent at $945.65 and palladium was up 0.9 percent at $1,006.25.