Bullion Is Seen Extending Best Quarterly Gain Since 2010

Gold declined in New York for the second time in three days as the dollar strengthened, lowering demand for the precious metal as an alternative investment.

The dollar gained as much as 0.6 percent against a basket of currencies amid concern that the global economy is slowing. Gold rallied 11 percent this quarter, the biggest gain since June 2010, as the Federal Reserve announced additional stimulus measures, increasing concern that inflation would accelerate and the greenback would decline.

“The dollar’s strength is keeping gold muted,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Also, some investors are locking in gains after the market rallied the last few weeks.”

Gold futures for December delivery fell 0.4 percent to settle at $1,773.90 an ounce at 1:17 p.m. on the Comex in New York. Prices fell 0.2 percent this week, the first loss in six weeks.

Silver futures for December delivery dropped 0.3 percent to $34.577 an ounce in New York. The metal is still up 25 percent this quarter, the biggest advance since the end of 2010.

Platinum futures for January delivery jumped 1.1 percent to $1,669.30 an ounce on the New York Mercantile Exchange, extending the quarterly gain to 15 percent.

Prices surged as mine violence in South Africa, the world’s largest producer, increased concern that production will decline. Labor action, which has spread since workers at platinum producer Lonmin Plc (LON) went on strike on Aug. 10, has closed some mines in the country.

A six-week walkout at Lonmin’s Marikana mine erupted into violence, with 46 killed, including 34 shot by police last month. The miners won wage gains of as much as 22 percent.

Palladium futures for December delivery gained 0.8 percent to $640.80 an ounce, extending the quarter’s gains to 9.6 percent.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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