LONDON Gold rose for a second day on Tuesday, largely tracking equities, as the market watched the U.S. presidential election in which a win for President Barack Obama could boost bullion by raising expectations for Federal Reserve stimulus.
Polls show Obama and Republican challenger Mitt Romney neck-and-neck in a race that will be decided in a handful of battleground states.
Some analysts said a Romney team which champions fiscal responsibility and is skeptical of Fed stimulus would be unlikely to renominate Fed Chairman Ben Bernanke for a third term in 2014. Easy U.S. monetary policy championed by Bernanke was a key driver to gold's all-time high last year.
"If Obama is reelected, that would be a boost for gold because it means continuity on U.S. public spending and Federal Reserve monetary policy," said Nicolas Berge, a trader at Geneva-based hedge fund Absolute Capital Group which invests in commodities futures and currencies.
Spot gold climbed 0.6 percent to $1,693.45 by 11:27 a.m. EDT (1627 GMT), after it hit a nine-week low of $1,672.24 on Monday.
U.S. COMEX gold futures for December rose $10.40 to $1,693.60, with trading volume on track to finish below average, preliminary Reuters data showed.
Investors will also closely watch races in the Senate and House of Representatives that could affect the "fiscal cliff," or $600 billion in spending cuts and tax increases that are set to be automatically triggered at the end of the year. Huge economic uncertainty related to the first U.S. fiscal cliff in 2011 helped boost gold to a record high.
Gold rose near $1,800 an ounce last month on central-bank stimulus measures but the rally has since faded as encouraging U.S. economic data including last Friday's strong jobs data lowered optimism driven by monetary policies.
Silver edged up 0.2 percent to $31.20 an ounce.
U.S. POLICY QUESTION
Given the Republicans are expected to retain control of the U.S. House of Representatives, a victory for Obama would be seen as raising the risk of policy paralysis.
The so-called fiscal cliff set to occur in early 2013 would hurt U.S. economic growth and underpin safe-haven assets.
"An Obama win is potentially supportive to gold because of the possibility of a much more difficult (policy) negotiation," said David Wilson, analyst with Citigroup.
In the physical market, India's gold imports could fall to 550 tonnes next year, after touching 967 tonnes in 2011, as high inflation and prices bite into disposable incomes of consumers, the head of a trade body said on Tuesday.
Among platinum group metals, platinum was down 0.1 percent at $1,536.97 and palladium rose 1.2 percent to $616.50.
(Additional reporting by David Brough in London; editing by Andrew Hay)