Dollar Rises in Quiet Trading; Gold Declines
The dollar rose broadly in quiet trading Tuesday, helped by expectations of stronger economic growth in the United States, but it finished the session below the highs of the day.
With many senior traders gathering in Toronto for a foreign-exchange dealers’ convention, activity slowed.
Gold prices fell, also in quiet trading, as the dollar gained ground. Republic National Bank of New York said gold bullion was bid at $310.75 an ounce, down $3.75 from Friday’s bid.
Silver dropped below $6 an ounce for the first time in more than two months.
Tuesday’s session marked the first trading in many European and U.S. bullion and currency markets since Friday. Most major markets were closed for holidays Monday.
Dollars Demanded
European currency dealers said dollars were in strong demand Tuesday because of the usual month-end buying by corporations that must settle their accounts.
Traders also said they expect U.S. economic growth to improve in the second quarter and were awaiting Thursday’s scheduled release of the U.S. index of leading indicators for further clues.
Michael Waresh, a trader at Bank of America’s New York trading center, said that, even though interest rates have been tumbling in U.S. bond markets and fell further on Tuesday, demand for dollars continued to be brisk. In recent years, the dollar frequently fell when interest rates declined in the United States, something that reduces returns on dollar-denominated investments.
Waresh also said traders now are paying more attention to the economic outlook than interest rates.
The Federal Reserve Board’s trade-weighted index measuring the value of the dollar against 10 other currencies was 149.73 Tuesday, up 0.31% from Friday and 12.24% higher than a year ago.
In Tokyo, the dollar rose to 251.60 Japanese yen from 251.40 yen Monday. Later in London, the dollar was quoted at 251.50 yen, and by the end of the trading day in the United States, the dollar had slipped slightly to 251.48 yen. On Friday, the dollar had closed at 250.925 yen in the United States.
The British pound fell to $1.2497 in London from $1.2572 Friday. Later in New York, however, sterling recovered to $1.2543, against $1.25375 late Friday.
Marks Up Slightly
Other late dollar rates in Europe, compared to late rates Friday, included: 3.1100 West German marks, up from 3.0885; 2.6160 Swiss francs, up from 2.5975; 9.4850 French francs, up from 9.4187; 3.5115 Dutch guilders, up from 3.4855, and 1.3785 Canadian dollars, up from 1.3745.
In Italy, where markets were open Monday, the dollar closed at 1,982.50 lire, up from 1,975.50 lire on Monday.
Dollar rates in New York, compared to rates Friday, included: 3.1090 West German marks, up from 3.1005; 2.6155 Swiss francs, up from 2.6095; 9.4750 French francs, up from 9.4450, and 1.3797 Canadian dollars, up from 1.37335.
In Hong Kong, where markets were open Monday, gold fell $1.13 to close at a bid of $315.21 an ounce.
In Europe, gold fell $4 from Friday’s late bids in both major bullion centers, dropping to $310.25 an ounce in London and to $311.50 in Zurich.
On the New York Commodity Exchange, gold bullion for current delivery fell $4.40 to $310.10 an ounce.
Silver fell to a late bid of $6.03 an ounce in London from $6.16 Friday. Later on New York’s Comex, silver bullion for current delivery fell 17.1 cents to close at $5.988 an ounce, its lowest finish since the $5.97 of March 18.
