By Nicholas Larkin March 1 (Bloomberg) -- Gold declined in London as the dollar extended gains against the euro, eroding demand for the precious metal as an alternative investment. Silver climbed. European Union Monetary Affairs Commissioner Olli Rehn said Greece must deepen measures to reduce its budget deficit after meeting with Greek Finance Minister George Papaconstantinou. Concern about Greece’s debt problems boosted the dollar last month. Gold typically moves inversely to the dollar. “We expect the euro and broad risk sentiment to provide further direction for gold,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. Gold for immediate delivery dropped $1.90, or 0.2 percent, to $1,115.70 an ounce at 11:48 a.m. local time. Bullion for April delivery was 0.3 percent lower at $1,115.80 on the New York Mercantile Exchange’s Comex unit. Prices may be supported as other commodities rose after the U.S. economy expanded at a 5.9 percent annual rate in the fourth quarter, the most in six years. Copper jumped as much as 5.6 percent as the main industrial metals on the London Metal Exchange gained on concern that the Chilean earthquake may disrupt supplies. “Base metals rallied strongly due to the earthquake in Chile and this is one factor that has been pushing other commodity prices up,” said Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. Gold increased to $1,117.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,108.25 at the afternoon fixing on Feb. 26. Spot prices were little changed last week and gained 3.4 percent in February, the first gain in three. The 8.8-magnitude earthquake that struck before dawn Feb. 27 killed more than 700 people. Highways and airports were shut by damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc. Africa Strike Africa’s biggest gold mines face an indefinite strike from March 7 unless Gold Fields Ltd. resolves a dispute over a fitness test with South Africa’s largest labor union. The National Union of Mineworkers threatened to stop work at all of the company’s operations, Johannesburg-based Gold Fields, Africa’s third-largest gold producer, said today. Silver for immediate delivery in London climbed as much as 1.7 percent to $16.75 an ounce, the highest price since Feb. 3, and was last at $16.5825. More than two-thirds of silver production is mined as a by-product of industrial metals, according to Deutsche Bank AG. “There is a good correlation between silver and copper,” said Fertig. “If there’s negative output for copper it affects silver.” Platinum rose to $1,563.75 an ounce, the highest price since Feb. 4, and last traded 0.6 percent higher at $1,550.75. Palladium added 1.3 percent to $437.75 an ounce. --With assistance from Glenys Sim in Singapore. Editors: Claudia Carpenter, Stuart Wallace To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net. To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net.

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