Dollar Rises Sharply; Gold Prices Plunge
The dollar rose sharply in light trading Monday, rebounding from the three-month lows of Friday.
As the dollar advanced, gold prices plunged. Republic National Bank in New York said gold bullion was bid at $318 an ounce as of 4 p.m. EST, down $11.50 from the late bid Friday.
Currency dealers said that, after the dollar’s slide of nearly 10% during the past five weeks, including a 4% drop last week, traders who had been betting on the dollar’s decline were ready to sell foreign currencies and buy back dollars to cash in on the retreat.
“We had a bit of a big move downward, now we’re getting a piece of that back,” said Joseph Volpicella, foreign exchange manager at the New York branch of Union Bank of Switzerland.
The Federal Reserve said its measure of the dollar against 10 other currencies rose 1.3%.
Delayed Reaction
James McGroarty, a vice president of Discount Corp. of New York, said some of the dollar’s gains may have represented a delayed reaction to a report Friday that the index of leading economic indicators, the economic barometer for the United States, rose a healthy 0.7% in February.
McGroarty said demand for dollars picked up as the U.S. currency sank as low as 3.03 West German marks in Asian trading Monday. In late February, the dollar had been flirting with a 13-year high of 3.50 marks. By the end of trading Monday, the dollar was back above 3.12 marks.
He said traders were eager to complete deals Monday while markets remained liquid. Beginning Thursday, many European markets will be closed in observance of the Easter holiday, and trading is expected to be extremely light this week, he said.
In Tokyo, the dollar edged up to 250.85 Japanese yen from 250.70 yen on Friday. Later, in London, the dollar rose to 253.05 yen and, by the end of the trading day in the United States, the dollar was quoted at 252.85 yen, against 250.50 yen late Friday.
The British pound fell to $1.2245 in London from $1.2305 on Friday. Later, in New York, the pound fell to $1.2195 from $1.2460 late Friday.
Other late dollar rates in Europe, compared to late rates Friday, included: 3.1140 West German marks, up from 3.0900; 2.6305 Swiss francs, up from 2.6150; 9.5000 French francs, up from 9.4350; 3.5135 Dutch guilders, up from 3.4850; 1,982.50 Italian lire, up from 1,972.50, and 1.3675 Canadian dollars, down from 1.3705.
Dollar rates in New York as of 4 p.m. EST, compared to late rates Friday, included: 3.1250 West German marks, up from 3.0575; 2.6395 Swiss francs, up from 2.5825; 9.5150 French francs, up from 9.3550, and 1.3710 Canadian dollars, up from 1.3640.
Gold began the trading day by falling to $328.20 an ounce in Hong Kong from $330.74 on Saturday.
In Europe, gold dropped $10.25 in London to a late bid of $319.75 an ounce, and, in Zurich, gold fell $8 from Friday to $321.50 an ounce.
On the New York Commodity Exchange, gold slid $11.20 to close at $318.40 an ounce.
Silver fell to a late bid of $6.535 an ounce in London from $6.675 on Friday.
