Foreign Exchange for Friday, May 17, 1985 : Broad Retreat on Dollar; Gold Mixed

The dollar staged a broad retreat in quiet trading Friday, giving up early gains, with the decline extended in slow after-hours trading after the Federal Reserve Board announced that it had cut its discount rate for the first time this year.

Within minutes of the Fed’s action, the dollar had slipped to 3.0530 West German marks from 3.0620 marks and from 3.0975 marks late Thursday.

Gold prices were mixed in a narrow range in listless trading. Republic National Bank of New York said gold bullion was bid at $320 an ounce as of 4 p.m. EDT, prior to the discount-rate cut.

That was down 50 cents from the late bid Thursday but up $4 from the end of the previous week.

Expectations that the Fed would reduce the discount rate from the 8% level that has prevailed since December have been a factor undercutting the dollar.

Lower interest rates in the United States make returns less attractive on dollar-denominated investments.