The dollar staged a sharp retreat late Wednesday as comments from U.S. Federal Reserve Chairman Paul A. Volcker again prompted jitters on trading desks.
Gold, which drifted lower in Hong Kong and Europe, reversed course and spurted higher in the United States as the dollar fell.
Republic National Bank in New York said gold bullion was bid at $291.50 an ounce, up $5.50 from Tuesday's late bid of $286. Earlier, the dollar made modest gains against all key currencies in nervous European trading.
But dealers said the dollar took a nose-dive near the close in Europe when Volcker, testifying before the House Budget Committee, said that if the dollar drops, a rapid swing in the mood of currency traders could accelerate the decline.