PRECIOUS-Gold bounces on dollar retreat as Biden moves closer to election win

* FACTBOX-Who is winning the U.S. election?

* European stocks hit two-week high

* Dollar slips to over one-week low

* U.S. Fed policy announcement at 1900 GMT (Updates prices)

Nov 5 (Reuters) - Gold jumped to a two-week high on Thursday as the dollar slipped, with investors betting on the likelihood of bigger economic support measures as Democrat Joe Biden inched closer to the Oval Office in the U.S. election.

Spot gold was up 0.9% at $1,919.61 per ounce by 1219 GMT, having earlier scaled its highest peak since Oct. 22 at $1,920.91.

U.S. gold futures gained 1.3% to $1,921.30.

The dollar index fell to a more than one-week low, making bullion cheaper for those holding other currencies.

“A Democrat in the White House would lead to a weakening of the dollar because of the additional spending and the nature of the mandates that he would set,” said StoneX analyst Rhona O’Connell.

“The weaker dollar is not necessarily reflecting the loss of confidence or anything, it’s more a question of what the markets would expect from a Biden presidency.”

Biden moved closer to victory on Thursday, while incumbent President Donald Trump alleged fraud and called for recounts even as officials tallied votes in the handful of states that will determine the final outcome.

Analysts expect Biden would enact larger stimulus measures than Trump, but chances of a divided Congress could stymie Biden’s fiscal policy.

“If the Democrats win the Senate and Biden becomes the president we would see a much larger stimulus package than both parties will probably agree on right now,” said Commerzbank analyst Daniel Briesemann.

Gold is considered a hedge against likely inflation fuelled by the unprecedented money printing by central banks to ease the economic blow from the COVID-19 pandemic.

Also on investors’ radar was the U.S. Federal Reserve’s policy decision at 1900 GMT.

Silver gained 2.9% to $24.61 an ounce. Platinum rose 2% to $886.49, while palladium jumped 3.3% to $2,364.44.

Reporting by Asha Sistla in Bengaluru; additional reporting by Swati Verma; Editing by Mark Potter/David Evans/Pravin Char