Gold near 3-week high as weaker dollar, short-covering supports

SINGAPORE (Reuters) - Gold was trading near its three-week high on Wednesday, boosted by short-covering by funds and technical buying, and as the dollar continued to weaken against the euro.

FUNDAMENTALS

* Spot gold ticked up 0.04 percent to $1,260.71 an ounce by 0019 GMT, after gaining 1.6 percent in the previous session.

* Funds have been buying to cover short positions ahead of the Federal Reserve's policy meeting next week. A break above strong resistance at $1,250 an ounce also triggered heavy buy orders.

* Budget negotiators in the U.S. Congress reached an agreement on Tuesday that, if approved by the House and Senate, could restore some order to the nation's chaotic budget process and avoid another government shutdown on January 15.

* During the last 16-day shutdown in October, gold lost 3.5 percent as investors shunned the metal's safe-haven appeal and chose to hold cash instead.

* South Africa's Association of Mineworkers and Construction Union has been given permission by a government mediator to call a strike over wages against world No. 3 platinum producer Lonmin.

* A mining consortium led by a Ghanaian firm intends to spend $100 million in Uganda over the next seven years to prospect for gold, Blaze Metal Resources Ashanti Ltd said.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin)