Dollar Sharply Lower as Early Rally Falters

The dollar staged a sharp retreat in late trading Friday after an early bid at a rally ran out of steam. Dealers said the slide was exaggerated by the light volume of trading that is typical during a session before a summer weekend.

The price of gold rose as the dollar fell. Republic National Bank of New York said gold bullion was bid at $321.25 an ounce as of 4 p.m. EDT, up $2.25 from the late bid Thursday, to wind up the week with a gain of $3.25.

In its late sell-off, the dollar dropped a steep 1.12% in value as measured against 10 major currencies by the Federal Reserve Board’s trade-based index.

But early in Friday’s session, the dollar was rising broadly as a result of unsubstantiated rumors in foreign exchange markets of another weekend shuffle of European currencies that would devalue the French and Belgian francs and revalue upward the West German mark.