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Gold rose on Wednesday, recovering after hitting its lowest in more than three months in the previous session, as the U.S. dollar eased from a two-month high and stocks fell.

The dollar index, which measures the greenback against a basket of six major Currencies, slipped 0.1 percent on Wednesday.

On Tuesday, Bloomberg reported that the European Central Bank would likely gradually wind down $90 billion in monthly bond purchases before ending its quantitative easing programme, citing unnamed officials at euro zone central banks.

"The ECB news added fuel to the fire because if the ECB is thinking about tapering, then the path for gold is lower," said Amit Kumar, research head at Adroit Financial Services. "Easy money taken away is always gold negative."

Later, an ECB media officer tweeted that the central bank's decision-making body had not discussed reducing the pace of its monthly bond buying.

“It’s a buying opportunity,” Bob Takai, chief executive officer and president of Sumitomo Corp. Global Research Co., said from Tokyo. Uncertainty about “the European currency, uncertainty about the sterling pound, all these things point to the direction that gold is going to be favored.”

Looming risks from the U.S. presidential election in November to Britain starting talks to leave the European Union next year may boost its role as a haven, said Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore. Increasing shale oil output in the U.S. is also likely to cool the surge in crude prices, curbing inflation, he said.

“As quickly as gold fell, as quickly gold could rally back,” Gan said in a report received Wednesday. “Weak inflationary pressures may once again lift gold prices back to their previous shine.” He was the most accurate forecaster of the metal in the third quarter, according to data compiled by Bloomberg.

Reference: Reuters, Bloomberg