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Gold steadies as election uncertainty offsets higher dollar, equities

FILE PHOTO: Gold bars at the Austrian Gold and Silver Separating Plant in Vienna, Austria, March 18, 2016. REUTERS/Leonhard Foeger/File Photo

(Reuters) - Gold steadied on Thursday as uncertainty surrounding the U.S. presidential elections and bets that fresh stimulus would drive inflation offset downward pressure on bullion from a higher dollar and improved appetite for riskier assets.

Spot gold was little changed at $1,889.21 per ounce by 11:18 am EDT (1518 GMT) flipping back and forth between positive and negative territory. U.S. gold futures rose 0.2% to $1,893.70.

While there is a “pretty robust increase in risk appetite,” with a higher dollar also weighing, inflation expectations are keeping gold supported, said Bart Melek, head of commodity strategies at TD Securities.

“We’re not saying that there’s going to be an inflation problem right away, but the concern is that if the policies continue and are repeated post election, then we would likely see both a lower dollar and real rates that will likely move lower.”

World shares headed for a one-month high as hopes for more stimulus offset Europe’s rising numbers of coronavirus cases and lockdowns, in turn capping bullion’s advance.

A higher dollar too kept gold in check.

But, gold was still up 24% so far this year, boosted by unprecedented government and central bank stimulus worldwide to revive economies as it is viewed as a hedge against inflation and a safe refuge during economic and politic uncertainties.

“It’s (gold) going to move higher, it’s going to be volatile. That’s going to be true for the next month going into the election, it’s going to be true for the two months after the election,” said Jeffrey Christian, managing partner of CPM Group.

Among other metals, silver gained 0.3% to $23.92 per ounce. Platinum rose 0.3% to $866.95 per ounce, while palladium was 0.9% higher at $2,373.21.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Chris Reese