LONDON: Gold bounced to a more than three-week peak on Thursday as increasing bets of a Joe Biden victory in the close US election boosted hopes for larger stimulus and dented the dollar, ahead of a Federal Reserve policy statement.

Spot gold rose 1.4% at $1,930.66 per ounce by 9:49 a.m. EST (1449 GMT), after hitting its highest since Oct. 12 at $1,932.51. US gold futures gained 1.9% to $1,932.80.

"It's the expectations of a stimulus agreement now being reached in the weeks ahead, we also have a Fed meeting today, where we're going to hear verbiage out of the Fed that screams for additional stimulus package," said David Meger, director of metals trading at High Ridge Futures.

"The dollar has faded dramatically on the back of the expectation for the additional stimulus plan to get in place now that the elections are over."

The dollar fell to a two-week low, making gold cheaper for holders of other currencies, ahead of the Fed policy decision at 1900 GMT.

Although Biden moved closer to victory on Thursday, while incumbent President Donald Trump alleged fraud and called for recounts, investors remained wary of a divided Congress that could stymie Biden's fiscal policy.

"Beyond the US election, the broader macro backdrop remains supportive of elevated gold prices given our expectations of further dollar weakness, real rates remaining negative and further stimulus," said Standard Chartered analyst Suki Cooper.

"Gold price risks stem from the fiscal stimulus negotiations, the Fed response as the FOMC could face a steepening yield curve if the election points to significant fiscal stimulus, and vaccine developments in response to COVID-19."

New US jobless claims remained high, pointing to the intensifying pandemic and weak economic recovery. Silver gained 4% to $24.87 an ounce. Platinum rose 2.6% to $892.26, while palladium jumped 4.8% to $2,399.36.