By Nicholas Larkin Nov. 7 (Bloomberg) -- Gold rose for the first time in three days in London as the dollar declined against major currencies, boosting the appeal of the metal as an alternative investment. The dollar fell before a Labor Department report today that will probably show the unemployment rate reached a five-year high as the economic slowdown deepened. Traders are betting the U.S. Federal Reserve will cut borrowing costs to 0.5 percent on Dec. 16, compared the European Central Bank rate now of 3.25 percent. ``We're not expecting good numbers today,'' said Bernard Sin, currency and metals trading chief at Swiss refiner MKS Finance SA, by phone from Geneva. ``Gold is reacting to that.'' The metal for immediate delivery rose $7.38, or 1 percent, to $740.23 an ounce by 11:30 a.m. in London. December futures gained $7.30 to $739.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange. Gold also followed crude oil higher as investors sought a hedge against inflation. Oil rebounded from a 19-month low, climbing 2.4 percent to $62.22 a barrel in New York. Bullion is heading for its first weekly gain in a month, gaining 2.4 percent so far. The metal fell to $742 in the morning ``fixing'' in London used by some mining companies to sell production, from $754.50 at the previous afternoon fixing. ``With the market as nervous as it is right now, its reaction to weaker-than-expected U.S. non-farm payroll data is difficult to predict,'' Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a note. ``It appears as if people are expecting the worst already, so maybe financial markets will not react significantly to the reading.'' Gold Trust The U.S. will probably report the jobless rate climbed to 6.3 percent in October, according to the median estimate of economists surveyed by Bloomberg News. Payrolls shrank by 200,000 workers, the biggest decline since the start of the Iraq War in March 2003, the forecasts indicated. The report from the Labor Department is due at 1:30 p.m. London time. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, added 36 metric tons in October. The fund held steady at 749.2 tons yesterday, according to figures posted on the company's Web site. The metal may rise toward ``$800 an ounce in coming days as safe haven buying reemerges on continuing concerns regarding the global financial system and economy,'' Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin, wrote in a note. Gold has dropped 28 percent since touching a record $1,032.70 an ounce in March. Silver climbed 2.1 percent to $10.195 an ounce. Futures in silver may rise in the next six months to near the record $21.44 an ounce set in March as investors seek out the metal as a haven, according to New York-based commodity adviser CPM Group. Among other metals for immediate delivery, platinum jumped $24, or 2.9 percent, to $860.50 and palladium was $6, or 2.7 percent, higher at $226.75 an ounce. Anglo Platinum Ltd., the world's biggest platinum producer, said it is still supplying customers from its Polokwane smelter in South Africa after an accident on Nov. 5. The company said the incident may cut output by as much as 200,000 ounces this year. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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