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Gold jumps 1% on dollar weakness, economic uncertainty

(Reuters) - Gold gained 1% on Wednesday, rebounding from a sharp decline in the previous session, as the dollar weakened and uncertainties surrounding the U.S. election and global economic recovery boosted the safe haven metal’s allure.

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

Spot gold was up 1% to $1,910.06 per ounce by 9:54 a.m. EDT (1354 GMT). U.S. gold futures rose 1.1% to $1,914.70.

“The dollar index is down on the day, yields are lower which is supporting gold and we’re also seeing some technical buying probably because yesterday’s correction was a little overdone,” said Bart Melek, head of commodity strategies at TD Securities.

The dollar was down against major currencies, while the benchmark 10-year yield also fell.

Bullion dipped as much as 1.9% on Tuesday after the greenback rallied on an impasse over U.S. stimulus.

“We’re going to get a stimulus no matter who wins the elections - Democrats or Republicans ... the fact of the matter is the U.S. needs a stimulus package, although it looks doubtful that we’ll get one in any meaningful way before the elections,” Melek added.

Gold, considered a hedge against inflation and currency debasement, has climbed 26% this year amid the unprecedented levels of global stimulus to ease the economic blow from the pandemic.

Investors also kept an eye on the U.S. presidential campaign, with polls showing Democratic candidate Joe Biden leading the race.

“The $1,900 an ounce level has been a battle ground for gold,” said Eli Tesfaye, senior market strategist at RJO Futures.

“The market has tried to take it below that level several times but the bears have been overcome by demand from the uncertainty in the upcoming U.S. elections, Brexit and stimulus.”

Elsewhere, silver rose 1.5% to $24.52 per ounce, platinum climbed 0.2% to $866.59 and palladium gained 1.7% to $2,355.13.

Reporting by Sumita Layek in Bengaluru; Editing by Sandra Maler