Gold Gains From 2-Week Low in London on Dollar; Palladium Climbs

London (Nov 6)  Gold climbed from a two-week low in London as the dollar weakened and investors weighed when U.S. stimulus may slow. Platinum gained and palladium reached the highest since August as a mine strike in South Africa continued.

Gold fell to $1,305.98 an ounce yesterday, the lowest since Oct. 17, and the run of six straight losses was the worst streak since May. The Bloomberg U.S. Dollar Index, a measure against 10 currencies, declined before data tomorrow that analysts said will show the country’s economic growth slowed last quarter. The gauge reached a six-week high on Nov. 4.

Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. The Federal Reserve will start cutting debt buying in March, according to an Oct. 17-18 Bloomberg News survey of economists. San Francisco Fed President John Williams said yesterday economic growth in recent months has fallen short of his expectations, partially eroding his confidence that gains in the labor market will endure without monetary stimulus.

“The U.S. dollar is a bit weaker” and that’s supporting gold, Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “Investors are expecting tapering in March next year. The risk is more that it will be later than earlier.”

Gold for immediate delivery rose 0.4 percent to $1,317.66 by 9:48 a.m. in London. Bullion for December delivery gained 0.7 percent to $1,317.60 on the Comex in New York. Futures trading volume was 28 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.

U.S. Data

U.S. gross domestic product grew at a 2 percent annualized rate in the third quarter, down from 2.5 percent in the previous three months, according to a Bloomberg survey before the data is released tomorrow. Nonfarm payrolls rose in October at a slower pace than in September, Labor Department figures may show Nov. 8, based on a separate poll.

Silver for immediate delivery rose 1.1 percent to $21.942 an ounce in London, after reaching $21.5625 yesterday, the lowest since Oct. 17. Palladium gained 1.2 percent to $757.92 an ounce, touching $761.92, the highest since Aug. 19. Platinum climbed 0.7 percent to $1,461.50 an ounce. Prices are 1.3 percent below a seven-week high set on Oct. 30.

South Africa accounts for about 72 percent of platinum mine supply and about 36 percent of palladium output, according to Barclays Plc. A strike that began Nov. 3 at Northam Platinum Ltd. in the country over wages continued, and the National Union of Mineworkers will meet tomorrow to discuss a wage offer, NUM Chief Negotiator Ecliff Tantsi said.

Pay Offers

The Association of Mineworkers and Construction Union, the largest at South Africa’s platinum mines, has rejected pay offers exceeding the 6 percent inflation rate, raising the possibility of strikes. An AMCU-led strike would halt operations at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, which together employ about 150,000 workers.

“The increased likelihood of labor unrest at South Africa’s platinum-group metals mines is likely to underpin firmer prices,” William Adams, an analyst at Fastmarkets.com in London, wrote today in a report.