Bullion Prices Mixed : Dollar Sags, Then Recoups in U.S.
The dollar turned in a mixed performance Thursday, falling to its lowest levels in 14 months against some currencies in Europe but then rebounding in later trading in the United States.
Gold prices were mixed. Republic National Bank in New York quoted a late bid for gold at $333 an ounce, down $5.50 from Wednesday’s after-hours bid.
The dollar closed in Europe at its lowest levels since June, 1984, against the West German mark, Swiss franc and Dutch guilder.
The decline was attributed to a new U.S. government report indicating that the economic sluggishness that has characterized the U.S. economy this year is continuing.
The government announced that new factory orders for durable goods fell by 2.8% in July, following a 3.6% June increase. It was the largest decline since a 2.9% drop in March.
Similar signs of economic weakness have encouraged some speculation that the Federal Reserve Board will take steps to stimulate the economy by encouraging lower interest rates. Declining interest rates would make the dollar less attractive to foreign investors.
But the dollar recovered later in the day as trading moved to the United States.
One reason cited by currency dealers was that closer examination of the durable-figures report indicated that a 17.6% drop in orders of military equipment was responsible for a big share of the overall decline.
As a result, some dealers said the economy may not be as weak as it had first appeared.
Described as ‘Choppy’
Carmine Rotondo, chief corporate currency dealer at Manufacturers Hanover Trust in New York, said trading was “choppy” for most of the day.
“The market is so nervous. It is looking for direction. We are not getting the growth the Reagan Administration has been forecasting,” he said.
He said the dollar’s rebound stemmed from profit taking as traders saw that the dollar enjoyed considerable support at lower levels.
Late in the day, the Federal Reserve Board reported that M1, its most basic measure of the nation’s money supply rose $900 million in the week ended Aug. 12. The rise was in line with market expectations, however.
In Tokyo, the dollar fell to 236.22 Japanese yen from 237.45 yen Wednesday. Later, in U.S. trading, the dollar rose to 236.675 yen from 236.45 yen.
The British pound rose to $1.4085 in London, compared to $1.3890 on Wednesday. But, in later U.S. trading, the pound slipped to $1.3975 from $1.4035.
Other late dollar rates in Europe, compared to late rates Wednesday, included: 2.7430 West German marks, down from 2.7800; 2.2450 Swiss francs, down from 2.2757; 8.3850 French francs, down from 8.4690; 3.0890 Dutch guilders, down from 3.1260; 1,842.50 Italian lire, down from 1,862.00, and 1.3533 Canadian dollars, down from 1.3562.
Dollar rates as of 4:40 p.m. EDT in New York, after release of the money supply report and compared to late rates Wednesday, included: 2.76375 West German marks, up from 2.7470; 8.4425 French francs, up from 8.4025; 2.2645 Swiss francs, up from 2.2510, and 1.3538 Canadian dollars, down from 1.3542.
In gold trading, bullion began the day by rising 84 cents to close at $337.36 an ounce in Hong Kong.
Later, gold rose in London to $336.00 an ounce from $335.50 Wednesday. In Zurich, gold closed at $336.00 an ounce, unchanged from Wednesday.
But, on the Commodity Exchange in New York, gold for current delivery reversed course and fell $5.10 to $333.80 an ounce.
Silver was quoted in London at a late bid of $6.29 an ounce, unchanged from Wednesday. Silver for current delivery fell 8.8 cents to $6.225 an ounce on New York’s Comex.
