By Nicholas Larkin Dec. 10 (Bloomberg) -- Gold rose for a third day in London as higher oil prices and a worsening global economic outlook increased the metal’s appeal as a safe haven and hedge against inflation. Platinum also advanced. Crude oil gained as traders closed out bets prices will drop and on signs that OPEC will cut production twice in as many months. European stocks fell today on earnings concerns, while Rio Tinto Group said it will eliminate 14,000 jobs and slash $5 billion in spending as the global recession curbs demand. “The oil price is up which is obviously positive for gold,” Mark O’Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin, said by phone. “Long-term concerns about the economic outlook is still leading more people to diversify.” Gold for immediate delivery climbed as much as $10.16, or 1.3 percent, to $787.11 an ounce and traded at $783.47 by 11:08 a.m. in London. February futures jumped $8.80, or 1.1 percent, to $783 in electronic trading on the Comex division of the New York Mercantile Exchange. The metal rose to $785.75 in the morning “fixing” in London used by some mining companies to sell production, from $767.75 at the afternoon fixing yesterday. Bullion has dropped 24 percent since reaching a record $1,032.70 an ounce in March as gains in the dollar and slowing world growth reduced demand for commodities. Gold remained higher even after the U.S. Dollar Index, which tracks the currency against those of six trading partners, reversed earlier losses. The index was little changed after earlier dropping as much as 0.5 percent. Bullion typically moves in the opposite direction to the dollar. Highland Gold Highland Gold Mining Ltd. said it will delay commissioning its Novoshirokinskoye mine in Russia to the first quarter of next year, and defer construction and cut costs at other projects, because of a “dramatic” drop in metal prices. “The market seems to be selling highs and buying dips because no-one is taking positions right now,” Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a note. “Although banks and brokers globally are now well capitalized, we doubt that credit fears have subsided for good.” Among other metals for immediate delivery in London, silver added 1 percent to $9.94 an ounce. Platinum rose 0.8 percent to $819.85 an ounce, and palladium was 0.4 percent higher at $178.75. Congress will vote as early as today on a plan Democrats reached with the Bush administration to keep U.S. automakers afloat while forcing them to restructure. General Motors Corp. and Chrysler LLC have said they need at least $14 billion in combined aid to keep operating through March 31. Automakers account for about a half of global platinum and palladium consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. The figures take recycling into account. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

Source