Gold Climbs to Highest Levels in 18 Months : Tension Between U.S. and Libya Fuels Rise

Gold prices continued to climb on world markets Thursday in tumultuous trading.

Buyers scrambled for gold, sending prices to their highest levels since July, 1984.

In London, gold jumped almost $15 an ounce, and in Zurich, the metal surged $13 an ounce.

Later, in New York, gold posted more moderate gains. On the Commodity Exchange, gold for delivery in January closed at $356.60 an ounce, up $7.10 from Wednesday.

Republic National Bank in New York quoted gold bullion at $355 an ounce at 4 p.m. EST, up $6 from Wednesday’s late bid.

Interest in gold grew following the escalation in tension between the United States and Libya over the bombings at airports in Rome and Vienna.

Traditionally, gold has been seen as a safe spot to store assets in uncertain times.

Japanese Buyers

Bullion dealers said the clamor for gold has fed on itself, with some buyers going into the market because they see others doing so and want to make their purchases before the precious metal goes any higher.

Some bullion dealers detected the Japanese as aggressive gold buyers.

In London, Mark Collier, investment manager of International Gold Corp., said the Japanese are purchasing “somewhere between 100 and 200 tons on the open market” in connection with celebrations to be held in April marking the 60th year of Emperor Hirohito’s reign.

In London, gold was quoted at a bid $361, compared to $346.20 the previous day.

In Zurich, gold was quoted at a bid $360.50, up from $347.50 on Wednesday.

Earlier, in Hong Kong, gold rose $9.34 to close at a bid of $349.97.

Silver benefited from the gain in gold.

In late trading in London, silver was quoted at $6.215 an ounce, up from $6.12 on Wednesday.

On New York’s Comex, silver for January delivery closed at $6.149, compared to $6.148 on Wednesday.

The dollar moved generally lower in overseas dealings but rose against several major currencies in the United States as traders awaited a weekend meeting of finance authorities from five major industrial countries.

Not From Arab Nations

The dollar received some support in overseas trading by the market’s belief that demand for gold was coming from Japan and not from Arab nations anxious to get rid of dollars following the confrontation between the United States and Libya.

“The market began to suspect that the money flowing into gold wasn’t coming out of Arab dollar investments, and it caused people to buy back dollars they had sold earlier in the day,” said a trader in Frankfurt, West Germany.

Generally, though, the dollar declined overseas against most major currencies.

Albert Soria, a vice president for Swiss Bank Corp. in New York, said U.S. traders remained preoccupied with the upcoming meeting of economics leaders from Britain, France, Japan, the United States and West Germany, known as the group of five or G-5.

Much Speculation

“(Thursday’s) activity was very lethargic. We are awaiting the outcome of the G-5 meeting. We really don’t know what to expect,” Soria said.

He said rumors about what might be done at the meeting have added confusion to dollar trading.

Speculation has been rife that, when they meet in London, the authorities will discuss a synchronized strategy to bring worldwide interest rates down.

The meeting has been described as a follow-up to the Sept. 22 gathering at which an agreement was reached to take joint action aimed at lowering the dollar to help relieve protectionist trade sentiments.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to a closing 202.39 Japanese yen from 202.95 yen at Tuesday’s close. Tokyo markets were closed Wednesday for a national holiday.

New York Rates

But later, in New York, the dollar was quoted at 202.5 yen, up from 202.42 yen on Wednesday.

The dollar rose slightly against the British pound. In late trading in London, it cost $1.4400 to buy 1 pound, against $1.4435 on Wednesday. In New York, the pound stood at $1.437, compared to $1.446 on Wednesday.

Dollar rates in New York, compared to levels late Wednesday, included: 2.465 West German marks, up from 2.4545; 2.082 Swiss francs, up from 2.07775; 1.40365 Canadian dollars, up from 1.4089, and 7.5675 French francs, up from 7.5475.

Other dollar rates in Europe late Thursday, compared to levels late Wednesday, included: 2.4610 West German marks, up from 2.4560; 2.08075 Swiss francs, down from 2.08225; 7.5525 French francs, down from 7.5625; 2.7730 Dutch guilders, down from 2.7735; 1,674.50 Italian lire, down from 1,681.50, and 1.40265 Canadian dollars, down from 1.40675.

See Foreign Exchange tables, Page 10.