SINGAPORE (Reuters) - Gold fell more than 1 percent on Wednesday as the dollar firmed after Democratic contender Barrack Obama won election as the country's 44th chief executive, stirring the prospect of new policies to banish poll campaign uncertainty.
The dollar extended gains against a basket of major currencies after posting its biggest one-day slide in 13 years the previous session, which in theory reduced bullion's appeal as an alternative investment.
Gold was trading at $750.75 an ounce, down $11.20 from New York's notional close on Tuesday, when it rallied around 5 percent on a weak dollar. Follow-through buying pushed up gold to a high of $768 on Wednesday before profit-taking kicked in.
Obama captured the White House after defeating Republican John McCain to make history as the first black U.S. president. He faces a welter of challenges, from tackling an economic crisis to ending the war in Iraq and trying to overhaul the U.S. health care system.
"Let's see what happens next. I think gold follows the dollar movements, and you can say it's still in a range of $720 to $770 for the time being," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"We will wait for the policy to revive the economy," he said.
The dollar rose 1.5 percent against a basket of major currencies, which triggered selling in crude oil. Weaker oil curbed gold's appeal as a hedge against inflation.
Some analysts say a win by Obama would be marginally better for the dollar, if only because the Democrats already control Congress. That would make it easier for a new administration to push through activist policies to boost markets.
But some dealers said gains in stock markets could cushion losses in gold. The broad-based Reuters/Jefferies CRB commodity index rose more than 5 percent on Tuesday, and gold was still supported by signs that a global recessionseemed to have been averted for the moment as U.S. stocks jumped.
"Given the significant rise in the price overnight, it bodes well for the rest of the day. We may well want to test the highs again in late afternoon, particularly around the opening of Europe and London," said Darren Heathcote of Investec Australia.
"I still don't think the market will particularly know what a longer term effect is on the dollar for sometime yet as the result of who wins. I find it very difficult to put a handle on it."
Gold has rebounded more than 10 percent since falling to 13-month low at $680.80 in late October, when investors cashed in bullion to pay losses in stock markets. The metal was still below a two-month high of $931 also hit last month as it struggled to revisit a record high of $1,030.80 in March.
The Nikkei rose 3.06 percent on Wednesday to track rallies in the United States.
Platinum was trading at $858.50 ounce, up $17.00 from New York's notional close on bargain hunting after tumbling to a five-year low around $732 last week.
New York gold futures fell $5.1 an ounce to $752.1.
