NEW YORK: Gold bounced to a one-and-a-half month peak on Thursday as growing prospects of a Joe Biden victory in a close US election boosted hopes for larger stimulus and dented the dollar, ahead of a Federal Reserve policy statement.

Spot gold surged 2.3% to $1,947.16 per ounce by 11:28 a.m. EST (1628 GMT), after hitting its highest since Sept. 21 at $1,952.41. US gold futures gained 2.9% to $1,951.80.

"It looks like it's getting more and more clearer that we're going to have a Democratic president next year," said Michael Matousek, head trader at US Global Investors, adding that it will assure in bigger stimulus plans and weigh on the dollar.

Global stocks jumped, while the dollar fell to a two-week low as Biden inched towards taking the White House following victories in Michigan and Wisconsin.

Biden is expected to enact larger stimulus measures than US President Donald Trump, although investors remained wary that a divided Congress could stymie Biden's fiscal policy.

Gold is considered a hedge against inflation and currency debasement, which are likely to result from a large stimulus.

Market participants were now awaiting a Fed policy decision due at 1900 GMT.

"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. Traders also took stock of lawsuits filed by the Trump's campaign in Michigan and Pennsylvania to stop vote counting.

"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.

Other precious metals also posted sharp gains, with silver gaining 4.5% to $24.99 an ounce. Platinum rose 3.4% to $898.71, while palladium jumped 5.2% to $2,408.61.