Dollar, Gold Prices Mixed in Quiet Trading

The dollar turned in a mixed performance in listless trading Tuesday, giving up gains with a broad retreat late in the session as a key short-term interest rate fell in the United States.

Traders said activity was quiet and trendless in advance of the Independence Day holiday Thursday in the United States and a meeting Friday in Vienna of the Organization of Petroleum Exporting Countries.

The price of gold also was mixed, falling in Hong Kong and European bullion centers but nudging higher in later trading in the United States. Republic National Bank of New York said gold bullion was quoted at $309.75 an ounce as of 4 p.m. EDT, up 25 cents from the late bid Monday.

The dollar rose against most major currencies late Monday, helped by fresh signs of renewed economic strength in the United States and by an upward spurt in the federal funds rate, the interest on overnight loans between American banks and a peg for many other short-term interest rates.

Government reports Tuesday of a sharp 9.7% rise in sales of new single-family homes during May and of a 2.1% increase in orders to U.S. factories in that same month helped send the dollar higher, said Daniel Holland, an assistant vice president at Discount Corp. of New York.

Federal Reserve Action

But Holland said the dollar lost ground later in the day after the Federal Reserve Board pumped money into the banking system by arranging the temporary purchase of government securities, a move that was followed by a decline in the federal funds rate.

Changes in U.S. economic indicators have been important factors affecting the dollar in recent months as traders have tried to determine whether the Federal Reserve would accommodate lower interest rates to revive the economy. Lower interest rates in the United States make returns less attractive on dollar-denominated investments.

In Tokyo, the dollar slipped to 248.20 Japanese yen from 248.25 yen Monday. Later in London, the dollar was quoted at 248.40 yen, and by the end of the trading day in the United States, the dollar had fallen to 248.045 yen, against 248.075 yen late Monday.

The dollar rose against the British pound in London, with sterling dropping to $1.3042 from $1.3090 Monday. But later in New York, sterling rose to $1.30745 from $1.3040 late Monday.

Other late dollar rates in Europe, compared to late rates Monday, included: 3.0455 West German marks, up from 3.0365; 2.5480 Swiss francs, down from 2.5482; 9.2775 French francs, up from 9.2550; 3.4350 Dutch guilders, up from 3.4225; 1,947.50 Italian lire, up from 1,934.50, and 1.3573 Canadian dollars, up from 1.3570.

Dollar rates in New York as of 4 p.m. EDT, compared to late rates Monday, included: 3.0385 West German marks, down from 3.04775; 2.54275 Swiss francs, down from 2.5535; 9.2675 French francs, up from 9.2650, and 1.3572 Canadian dollars, down from 1.3575.

Gold fell $4.23 in Hong Kong to close at a bid of $311.70 an ounce.

In Europe, gold bullion fell $3.80 in London to a late bid of $309.50 an ounce, and gold dropped $5.40 in Zurich to $308.10 an ounce.

But on the New York Commodity Exchange, gold bullion for current delivery later gained 80 cents to close at $309.80 an ounce.

Silver was quoted in London at a late bid of $5.880 an ounce, down from $6.055 Monday. Later on New York’s Comex, silver bullion for current delivery was quoted at $5.901 an ounce, down 2.7 cents from Monday.