On Heels of 18-Month Highs : Gold Advances in Asia but Steadies in Europe

Gold, which hit 18-month highs Thursday, continued to rise sharply in Hong Kong and New York today but failed to make further gains when European markets opened. London dealers said the market was volatile, while in Zurich a fall of $4 was registered in the first hours of today’s trading.

On Thursday, the price of gold was $13 higher in Zurich and $14.80 higher in London to reach 18-month highs. But today, gold opened in London at a bid price of $357.50 an ounce, compared with late Thursday’s $361, and fluctuated sharply between $357 and $361.

At mid-morning, the city’s five major bullion dealers fixed a recommended price of $357.25.

In Zurich, the bid price was $356.50 an ounce, down from $360.50 late Thursday.

Earlier, in Hong Kong, gold rose $7.82 to close at a bid $357.79 an ounce.

In New York Thursday, gold rose $7.10 to close at $356.60.

Silver Closes Down

Silver was quoted today in London at a bid price of $6.170 an ounce, down from Thursday’s $6.215.

On Thursday, gold prices climbed to their highest levels since July, 1984, as 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.

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.

The U.S. dollar, meanwhile, opened stronger against European currencies today.

Dealers said the currency markets were holding back until after the weekend meeting in London of finance ministers of the five leading Western industrial powers.

Lower Interest Rates

There have been reports that the ministers may act to lower interest rates in an attempt to stimulate their economies. This would follow up their last meeting in September when they decided to act in concert to weaken the dollar in a bid to boost U.S. trade competitiveness.

“Everyone is looking ahead to the meeting. I don’t see any dramatic movement in the rates today,” said a Frankfurt dealer.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to a closing 202.30 yen from Thursday’s 202.39. Later, in London, it pulled ahead again to 202.50 yen.

Other dollar rates at mid-morning, compared with late Thursday, included: 2.4645 West German marks, up from 2.461; 2.0875 Swiss francs, up from 2.0807; 7.565 French francs, up from 7.5525; 2.776 Dutch guilders, up from 2.773; 1,680.50 Italian lire, up from 1,674.50, and 1.4015 Canadian dollars, down from 1.4026.

In London, the British pound was lower at $1.4370, compared with $1.44 Thursday.

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,” said Albert Soria, a vice president for Swiss Bank Corp. in New York.

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.

See Foreign Exchange tables, Page 10.