BENGALURU, Oct 14 (Reuters): Gold firmed on Wednesday after last session's sharp drop spurred demand for the safe-haven metal from investors worried about global economic recovery and uncertainty surrounding next month's US presidential election.
Spot gold was up 0.2 per cent to $1,895.41 per ounce by 0947 GMT, after shedding as much as 1.9 per cent on Tuesday in reaction to the dollar's jump. US gold futures gained 0.2 per cent to $1,899.20.
"We're seeing some price recovery as lower prices generated buying interest by investors since the general backdrop of gold is still positive," said Commerzbank analyst Carsten Fritsch.
"Low interest rates, expansion of monetary policy, ballooning public debt, uncertainty regarding US elections; all these factors are supportive for gold prices," he added.
Gold is considered a hedge against inflation and currency debasement amid the unprecedented levels of global stimulus to ease the economic blow from the pandemic.
But investors who trim risk assets also tend to shift into the dollar and fading hopes for a new coronavirus relief package in the United States and a pause in key COVID-19 vaccine trials boosted the US currency's appeal, limiting gold's advance.
The dollar hit a near one-week high against major currencies.
"In the near term, the dollar could continue to rise both because of risk aversion because stimulus seems to be stuck and also because of (company) earnings forward guidance," said DailyFx currency strategist Ilya Spivak.
Investors also kept an eye on the US presidential campaign, with polls showing Democrat rival Joe Biden leading the race.
On the technical side, "bullion will need to break through $1,920 to have the chance to once again challenge the psychological threshold of $2,000," ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Elsewhere, silver eased 0.2 per cent to $24.11 per ounce, while platinum rose 0.2 per cent to $867 and palladium gained 1.5 per cent to $2,349.57.
