Gold hits 1-month high as investors worry over US election

Gold hit a one-month high on Wednesday as investors grew more concerned over the global economic outlook and started looking for safe-haven assets on signs the US presidential election race was tightening.

The mounting anxiety over the elections after the renewal of the Federal Bureau of Investigation (FBI) probe into Democratic candidate Hillary Clinton's emails has left investors favouring gold and other safer assets over riskier ones like stocks. 

"Uncertainty leading up to the US election is likely to provide support to the precious complex," MKS PAMP Group trader Jason Cerisola said. 

Spot gold was up 0.33% at $1,292.09 an ounce at 0420 GMT. Bullion touched its highest since October 4 at $1293.10 per ounce. 

US gold futures rose 0.4% at $1,293.10 per ounce, after earlier touching a one-month high at $1,294.10. 

Markets were also awaiting direction on a US interest rate hike from a two-day US Federal Reserve policy meeting. The outcome of the Federal Open Market Committee (FOMC) meeting was due later in the day, although a rise in rates before December was seen as unlikely. 

"The FOMC this week isn't in play. What's driving all of this is that (Republican candidate) Donald Trump is closing in on Hillary Clinton at a very rapid rate post the developments in the email server saga," said Jeffrey Halley, senior market analyst at OANDA.

"For the next two weeks, it is all going to be about the US elections and gold is a main beneficiary," he said.

The Fed is mostly expected to keep interest rates unchanged on Wednesday though setting the stage for a hike in December.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, and also boost the dollar, making the metal more expensive for those holding other currencies.

Asian shares tumbled to seven-week lows on Wednesday and the dollar was on the defensive just days away from the US presidential vote on November 8. 

The dollar index, which measures the greenback against a basket of major currencies, was down 0.03%.

Spot gold may end its bounce around a resistance at $1,293 per ounce, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver was up about 0.5% at $18.41 per ounce. The metal hit a high of $18.48 in its previous session, it's highest since October 4.

Platinum slipped 0.4% to $986.49 per ounce. Palladium was down about 0.1% at $631.10.