Dollar Makes Sharp Recovery Abroad; Gold Also Advances

The U.S. dollar recovered sharply against all major currencies except the Canadian dollar in European trading today. Gold prices were $3 to $4 higher.

Foreign exchange dealers said that sentiment in their markets was that the dollar had fallen far enough.

“There has been one-way traffic into the dollar all day,” said one Frankfurt, West Germany, dealer.

Dealers said the markets were shrugging off the effects of a possible lowering of the discount rate in West Germany when its central bank meets Thursday.

Today’s late European rates compared as follows with late rates Tuesday: 2.2197 West German marks, up from 2.2060; 1.8905 Swiss francs, up from 1.8715; 6.8850 French francs, up from 6.7750; 2.5285 Dutch guilders, up from 2.4905; 1,522.00 Italian lire, up from 1,497.50, and 1.4165 Canadian dollars, down from 1.4235.

In Tokyo, the dollar had closed earlier at 179.30 Japanese yen, up from 179.00.

In London, one British pound cost $1.4580, cheaper than Tuesday’s $1.4600.

Bullion markets rallied on buying by private investors, dealers said. In Zurich, gold closed at $341.50 bid an ounce, its highest level for five trading sessions and up from $337.50 late Tuesday. Gold peaked at $345 bid during the day.

Gold closed in London at $340.90 bid, up from $337.60 late Tuesday.

Hong Kong gold closed at $341.67 bid, up from $337.06.