Dollar Gains; Gold Declines

Rising interest rates pushed the U.S. dollar higher in thin, volatile trading today. The price of gold fell.

Currency dealers in London said the dollar was being underpinned by market sentiment that there was little chance of U.S. interest rates moving lower.

The interest rate on overnight dollar deposits in Europe increased of a percentage point to 8.25%.

Trading volume was low because most European markets were closed for May Day. No U.S. economic statistics were released that had any effect on currency markets, the dealers said.

The dollar closed in Tokyo at 252.50 Japanese yen, up from 251.40 yen Tuesday. Later, in London, the dollar was quoted at 252.90 yen.

The British pound fell to $1.2210, compared to $1.2347 on Tuesday.

Other late dollar rates, compared to Tuesday’s levels, were: 3.1435 West German marks, up from 3.0975; 2.6365 Swiss francs, up from 2.5900; 9.5850 French francs, up from 9.4375; 3.5515 Dutch guilders, up from 3.5050; 2,007.00 Italian lire, up from 1,981.70, and 1.3686 Canadian dollars, up from 1.3662.

Gold was quoted in London at a bid price of $311.50, down from $321.00 on Tuesday.

The Zurich bullion market was closed.

In Hong Kong, gold fell $8.81 to close at $316.63 bid.

Silver was quoted in London at a late bid of $6.105 an ounce, down from $6.285 on Tuesday.