Gold inches higher on tepid dollar; Trump-Biden debate in focusGold inches higher on tepid 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 prices edged up on Monday as the dollar slipped off a two-month peak hit last week as political uncertainty accelerated ahead of the first presidential election debate between U.S. President Donald Trump and his Democratic rival Joe Biden.

Spot gold was up 0.1% at $1,861.13 per ounce by 0503 GMT. U.S. gold futures were steady at $1,865.90.

“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.

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.

On the technical front, spot gold may break support at $1,855 per ounce, said Reuters technical analyst Wang Tao.

Meanwhile, speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Sept. 22.

Elsewhere, silver was steady at $22.87 per ounce, platinum gained 0.6% to $852.21 and palladium rose 0.1% to $2,218.18.

(Reporting by Eileen Soreng and Brijesh Patel in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)