It has something to do with the way that gantry calls the update server.
Make sure to backup your database before doing this.
Here was the solution for me with Cerulean:
1. Open your database in phpMyAdmin
2. Browse xxxxx_update_sites
3. Edit the row that has Gantry Framework Update Site as the name
4. Set enabled to 0 and save
5. Edit the row with RocketTheme Update Directory as the name
6. In the text field remove the blank space before and after the URL and save
7. Open your Joomla Administration panel
8. Clear all Cache - in J3 go to System > Clear Cache > Click the box to select all > Delete
Assuming it was the same problem I had you should be error free.
I have done this 5 times to make sure that it was consistent, if I revert the changes and clear the cache I get the error every time.
Edit:
After a little more investigation it would seem that this file is improperly formatted and seems to be causing the error. I hosted the file with fixed formatting and it works just fine.
www.gantry-framework.org/updates/joomla16/gantry.xml
<?xml version="1.0" ?>
should be
<?xml version="1.0"?>
I hosted it on my server with the updated formatting and pointed the Gantry Framework Update Site row to it and it works without errors.