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Gold rises as pandemic worsens, U.S. elections in focus

(Reuters) - Gold prices gained on Monday on uncertainty surrounding the outcome of Tuesday’s U.S. presidential election, while a spike in global coronavirus cases exacerbated fears about an economic recovery, further boosting the safe-haven metal’s appeal.

FILE PHOTO: A machine engraves information on an ingot of 99.99% pure gold at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia September 22, 2017. REUTERS/Ilya Naymushin/File Photo

Spot gold rose 0.6% to $1,889.76 per ounce by 10:23 a.m. EDT (1523 GMT), while U.S. gold futures were up 0.6% to $1,891.

“We are expecting an increase in volatility coming in the next 72 hours. So, because of that people are looking at gold and silver as safe haven play,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Democrat Joe Biden is leading U.S. President Donald Trump in national opinion polls, but the race is tight in several battleground states, with fears that the results may not be clear on Tuesday night as ballot counting could take days.

“If the results are not clear, we can go back to $1,940 an ounce. But regardless of which candidate wins, there are underlying pieces of continued stimulus, central banks are expanding balance sheets, interest rates are remaining low for extended period of time,” Streible said.

Gold, considered a hedge against inflation and currency debasement, has jumped 25% so far this year amid unprecedented global levels of stimulus during the pandemic.

Coronavirus cases, meanwhile, continued their grim climb in the United States, while Europe’s total infections crossed 10 million on Sunday.

“The gap between both the candidates is narrowing, the market is looking if this is going to be resolved on Nov. 3 or drag on for a long time with recounts and is pricing that in,” said Eli Tesfaye, senior market strategist at RJO Futures.

However he added, a fast track breakthrough in vaccine could bring the metal’s prices down.

Silver jumped 1.1% to $23.88 an ounce, platinum gained 1.4% to $860.31, while palladium rose 0.1% to $2,214.80.

Reporting by Sumita Layek in Bengaluru; editing by Emelia Sithole-Matarise