PRECIOUS-Gold hits 2-month peak on prospect of Democratic win in Georgia – Reuters UK

 (Recasts, adds analyst comment, updates prices)
    * Democrats win one Georgia runoff and lead in second
    * Dollar index recovers slightly from multi-year low
    * Minutes of U.S. Fed's latest policy meeting due at 1900
GMT

    By Asha Sistla
    Jan 6 (Reuters) - Gold fell 1% on Wednesday, after earlier
climbing to a near two-month high, as the dollar pared losses,
while investors focused on the outcome of the U.S. Senate
run-off election in Georgia.
    Spot gold        was down 0.8% to $1,934.72 per ounce at
1353 GMT, having earlier hit a near two-month peak at $1,959.01.
U.S. gold futures        dipped 0.9% to $1,937.20.
    "Given gold's moves in the last couple of days and just how
overextended the dollar decline looks, we could just be seeing
some profit taking and a bit of a technical correction," said
OANDA analyst Craig Erlam. 
    "Gold has traded at notable resistance over the last couple
of days around $1,950-1,960 and we may just be seeing a
pullback."
    The dollar index recouped losses from a dive to 2-1/2-year
lows, making gold a relatively less attractive bet for those
holding other currencies.        
    Also weighing on gold were higher U.S. Treasury yields
           , which increase the opportunity cost of holding
non-interest bearing bullion.       
    However, gold remains supported as an inflationary hedge, 
with investors anticipating additional fiscal stimulus as the
Democrats take a lead in runoff votes that will determine
control of the U.S. Senate.             
    "Whether (the policies) turn into (something) productive
down the line remains to be seen, but clearly they're going to
be adding considerable debt onto considerable debt, and that's
good for gold," said Ross Norman, an independent analyst.
    Meanwhile, minutes of the U.S. Federal Reserve's Dec. 15-16
policy meeting are due at 1900 GMT.
    The Fed might decide to unleash more stimulus once it has a
clearer picture on how the U.S. Congress turns out, said Howie
Lee, an economist at OCBC Bank.
    In other metals, silver        fell 1% to $27.31 an ounce.
Platinum        dipped 1.5% to $1,095.10, while palladium       
was down 0.6% to $2,451.26.

 (Reporting by Asha Sistla and Sumita Layek in Bengaluru,
Editing by Mark Potter)