NEW YORK: Gold pared losses after sliding over 1% on Wednesday as the dollar steadied and expectations that Democrat Joe Biden could win the American presidential election bolstered hopes for a larger US stimulus.

Spot gold fell 0.3% to $1,901.93 per ounce by 10:53 a.m. EST (1553 GMT). US gold futures eased 0.2% to $1,906.

Prices fell more than 1% earlier in the session as the dollar emerged as the favoured safe haven, with Trump falsely claiming victory with millions of votes still uncounted in a tight presidential race.

“As this election process is starting to drag down, we’re starting to see that there is a slight edge to a Biden victory outcome and that’s why we saw the dollar paring its gains,” said Edward Moya, senior market analyst at OANDA.

Although Biden is tipped to win the election, the Democrats appeared to be falling short in their attempts to take control of the US Senate.

Biden is expected to inject large amounts of stimulus to ease the economic fallout of the pandemic. Safe-haven gold is considered a hedge against inflation and currency debasement, which are likely to result from a large stimulus.

“Now that we’re realistically in a divided government scenario, we’re unlikely to get the same type of stimulus that the market was hoping for, but we will still get something nonetheless,” said Bart Melek, head of commodity strategies at TD Securities.

“And let’s not forget that the Federal Reserve is extremely accommodative. There are other routes to stimulus and not all of them are through the US Congress.”

The dollar gave up early gains against rivals, while stocks rallied as markets waited for the US election outcome.

“We wanted to have election certainty and obviously didn’t get that. Everyone is trying to figure out how things are going to unfold and the big risk is that we go to the courts ... that is going to drive the safe-haven demand,” Moya added.

Silver fell 0.6% to $24.02. Platinum rose 0.4% to $869.69 and palladium climbed 1% to $2,306.16.