Gold advances toward six-month high as stimulus bets increase

Gold, trading near a six-month high, may gain for a third day on speculation central banks from the U.S. to China will add to stimulus as economic data disappoints. Palladium rallied to the highest level in four months.

Cash gold was at $1,736.80 an ounce at 2:18 p.m. in Singapore after earlier rising 0.3 percent. The metal gained to $1,741.70 on Sept. 7, the most expensive since Feb. 29, after U.S. jobs growth in August trailed estimates. Assets in gold- backed exchange-traded products expanded to a record 2,474.117 metric tons on Sept. 7, data compiled by Bloomberg show.

The U.S. economy added 96,000 workers last month compared with 130,000 forecast by economists in a Bloomberg survey, adding to speculation the Federal Reserve may announce more measures this week. Reports yesterday showed China’s industrial output grew at the slowest pace in three years and President Hu Jintao said that economic expansion faces “notable downward pressure,” signaling more stimulus efforts may be needed.

“As policy makers contemplate more easing measures to aid growth, gold’s property as a hedge against the debasement of currencies will become more appealing,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of China’s largest state-owned investment group. The expectations “will keep prices elevated,” Sun said.

December-delivery gold was little changed at $1,738.20 an ounce on the Comex after most-active prices climbed to $1,745.40 on Sept. 7. A gauge of indicators of market expectations for additional Fed stimulus rose to 99 percent in August, the highest ever, according to Citigroup Inc.

Policy makers are acting to boost growth as Europe’s fiscal crisis drags on. South Korea will announce support measures today, Finance Minister Bahk Jae Wan said. Last week, European Central Bank President Mario Draghi said policy makers agreed to an unlimited bond purchase program to help tame the debt crisis.

Cash palladium rose for a seventh day in the best run since January as labor disputes in South Africa, the second-largest producer, cut supplies. The metal gained as much as 1.5 percent to $664 an ounce, the highest since May 4, and traded at $658.50.

Spot silver rose for a third day, advancing as much as 0.8 percent to $33.9625 an ounce, the highest price since March 12. Platinum climbed as much as 0.9 percent to $1,605.50 an ounce, the most expensive since April 13, gaining for a seventh day.