Gold inches higher on subdued dollar; Trump-Biden debate in focusGold inches higher on subdued dollar; Trump-Biden debate in focus
FILE PHOTO: Gold bars are pictured on display at Korea Gold Exchange in Seoul

By Eileen Soreng

(Reuters) – Gold edged up on Monday as the dollar slipped off a two-month peak it hit last week, due to caution as political uncertainty built ahead of the first presidential election debate between U.S. President Donald Trump and his Democratic rival Joe Biden.

Spot gold rose 0.1% to $1,861.02 per ounce by 0326 GMT.

U.S. gold futures were down 0.1% at $1,863.70.

“Gold is going to be driven by the tenor of the U.S. dollar,” said Stephen Innes, chief market strategist at AxiCorp.

“The big move is going to probably occur after the presidential debate when we have a better read on where the polls are going to be sitting.”

The dollar index was down 0.2% against rivals, slightly off a two-month peak hit last week. [USD/]

A firmer dollar makes bullion more expensive for holders of other currencies.

Trump and Biden will have their first presidential election debate on Tuesday.

Investor focus will also be on a new fiscal support package after U.S. House Speaker Nancy Pelosi said on Sunday a deal could be reached with the White House on a coronavirus relief package and that talks were continuing.

“I don’t think they are expecting a big deluge but some sort of middle ground,” Innes added.

Global central banks and governments have released massive stimulus to prop up their economies from the impact of the COVID-19 pandemic, pushing gold more than 20% higher this year. However, prices have retreated by about 10% since hitting a record peak in August.

Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Sept. 22, data from U.S. Commodity Futures Trading Commission showed. [CFTC/]

Among other precious metals, silver dipped 0.2% to $22.81 per ounce, platinum gained 0.5% to $851.46 and palladium rose 0.1% to $2,218.76.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich)