Dollar Slumps in Slow Trading; Gold Mixed

The dollar drifted lower against most other major currencies in worldwide foreign exchange trading Wednesday.

In U.S. markets, the dollar managed to finish above its worst levels of the session, however.

Gold prices were mixed within a narrow range. Republic National Bank in New York quoted gold as of 4 p.m. EDT at $315.50 an ounce, down 50 cents from Tuesday’s late bid.

Currency dealers said demand for dollars slackened because of traders’ uncertainty about the future course of the U.S. economy.

A few recent indicators from the government have signaled an apparent pickup in economic expansion. On Tuesday, for example, the Commerce Department said new orders for durable goods in May rose 4.1% from the previous month, which helped the dollar edge higher.

Insufficient Evidence

But as yet there is insufficient evidence to conclude whether the economy is indeed expanding at a healthy clip and what subsequent impact it will have on American interest rates, which determine yields available on dollar-denominated investments, traders said.

Ronald Holzer, chief dealer at Harris Trust & Savings Bank in Chicago, said the “jury is still out on how strong the economy is going to be the remainder of the year, and thus the course of monetary policy. That is what is causing the dollar to lack direction.”

The markets are hoping to get additional clues about the economy on Friday, when the Commerce Department releases its May index of leading economic indicators.

“I don’t expect to see much movement in the dollar at least until after the leading indicators and the end of the month,” a dealer in Frankfurt said. “We’re beginning to move into the summer lull.”

The dollar opened its trading day in Tokyo by climbing to 249.15 Japanese yen from 248.70 yen late Tuesday. In London, the dollar was quoted at 248.70 yen, and, in U.S. trading, the dollar edged up to 248.90 yen from 248.85.

Pound Heads Higher

Also in London, the British pound climbed to $1.2945 from $1.2865, and, in U.S. dealings, sterling rose to $1.2962 from $1.28645.

Other dollar rates in Europe, compared to late rates Tuesday, were: 3.0460 West German marks, down from 3.0710; 2.5497 Swiss francs, down from 2.5750; 9.3075 French francs, down from 9.3725; 3.4380 Dutch guilders, down from 3.4655; 1,949.25 Italian lire, down from 1,960.00, and 1.3643 Canadian dollars, up from 1.3641.

Other dollar rates in U.S. trading as of 4 p.m. EDT and compared to Tuesday were: 3.0520 West German marks, down from 3.0615; 2.5435 Swiss francs, down from 2.5600; 9.2975 French francs, down from 9.3250, and 1.3630 Canadian dollars, down from 1.3645.

In bullion trading, the price of gold fell 46 cents in Hong Kong to $316.48 an ounce.

In London, gold gained $1 to $317.50, and, in Zurich, gold climbed to $317.50 from $315.50 late Tuesday.

But on the Commodity Exchange in New York, gold for June delivery slipped 30 cents to $315.70 an ounce.

Silver followed gold, rising in London to $6.180 an ounce from $6.150 but losing 1.3 cents, to $6.137 an ounce, in spot contracts on New York’s Comex.