New York/London: Gold rallied to a one-month high on Wednesday, as uncertainty over the outcome of the U.S. election knocked stocks and the dollar lower, but bullion pared gains slightly after the Federal Reserve held interest rates steady as expected.


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Following a two-day meeting, the Fed signaled it could hike rates in December as the economy gathers momentum and inflation picks up. Two policymakers dissented in the decision in favor of an immediate hike, down from three in September.


Spot gold rose to $1,307.76 an ounce, its highest since Oct. 4, and was up 1.05 percent at $1,301.36 by 3:05 p.m. EDT (1905 GMT). U.S. gold futures for December delivery settled up 1.6 percent at $1,308.20 per ounce.


"The Fed, as expected, gave the election wide berth providing a modestly more hawkish statement which may have mollified Boston Fed President Rosengren enough to prevent a second consecutive dissent," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.


"Gold and silver are marginally off their highs after recent sharp gains as the Fed refrains from further inflaming electoral anxiety."


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.


"In a minor but perhaps indicative shift, the statement suggested that the Fed is now only waiting for `some` further evidence of progress," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.


Gold prices were strong ahead of the Fed statement as investor anxiety over the election after the renewal of an FBI probe into Democratic candidate Hillary Clinton`s emails knocked global equity prices and the U.S. dollar <.DXY> lower for the second straight day.


Traders were starting to reconsider long-held bets of a victory for Clinton amid signs Republican Donald Trump could be closing the gap after the FBI`s announcement of the new email probe on Friday.


The world`s largest gold-backed exchange-traded fund, New York`s SPDR Gold Shares , reported its first inflow in just over a week on Tuesday.


Among other precious metals, silver was up 1.4 percent at $18.58 an ounce, after reaching $18.74, its highest since Oct. 4.


Platinum was up 0.4 percent at $994, after climbing to a one-month high at $1,001.80. Palladium was down 0.8 pct at $626.97.