Gold jumped nearly 2 percent on Tuesday as traders bet that a possible Barack Obama victory in the U.S. election would mean further Federal Reserve stimulus, and prices also got a technical bounce from a support level.

After trading slightly higher throughout the morning, the metal suddenly jumped $20 in what some gold traders and fund managers called "an Obama rally," speculating that four more years of a Democrat in the White House would contribute to an extension of the Fed's easy monetary policy.

Strong rallies in crude oil and U.S. equities also fueled gold buying.

Some analysts also cited technical buying after gold rebounded from support at its 100-day moving average in the last several sessions. They said gold was due for a rally on charts after its recent pullbacks had sent prices near a perfect bottom around $1,660 an ounce.

"Gold rallied in oversold conditions because early poll indications suggested Obama could win, and that bolstered hopes of Bernanke and Fed stimulus," COMEX gold options floor trader Jonathan Jossen said.

But some market watchers suggested Wall Street's gain was boosted by bets that Republican Mitt Romney could pull off a surprise victory, which lifted defense and energy shares.

Analysts say a Republican team that has criticized Fed stimulus would be unlikely to renominate Fed Chairman Ben Bernanke for a third term in 2014.

Spot gold gained 1.9 percent to $1,716.35 an ounce by 3:47 p.m. EST (2047 GMT), sharply above a nine-week low of $1,672.24 set on Monday.

U.S. COMEX gold futures for December settled up 1.9 percent, or $31.80, at $1,715, with trading volume almost 10 percent above its 250-day average, preliminary Reuters data showed.

Gold rose near $1,800 an ounce last month on central-bank stimulus measures but the rally has faded as encouraging U.S. economic data including last Friday's strong jobs data lowered optimism driven by monetary policies.

Silver, which tends to track gold but can be more volatile, jumped 2.9 percent to $32.04 an ounce.

FISCAL CLIFF HANGING

Investors will also watch Congressional races that could affect the "fiscal cliff," or $600 billion in spending cuts and tax increases that are set to be automatically triggered at the end of the year.

"I think the market will retrace a lot of this gain after the election as we still have other uncertain factors for gold such as the fiscal cliff," said Frank McGhee, head metals trader of Integrated Brokerage Services LLC.

Given the Republicans are expected to retain control of the U.S. House of Representatives, a victory for Obama would be seen as raising the risk of policy paralysis.

Worries about a slowing economy because of the fiscal cliff could weigh on gold. However, huge economic uncertainty related to the first U.S. fiscal cliff in 2011 had boosted safe-haven demand and sent gold to a record high.

Among platinum group metals, platinum was up 0.8 percent at $1,552.25 and palladium rose 1.1 percent to $615.80.