Dollar Falls Against Key Currencies

The dollar dropped against most key currencies Monday, hitting another low against the Japanese yen, driven down by expectations that the U.S. economy might lay the basis for lower interest rates.

Gold prices gained on European markets and declined slightly in the United States. Republic National Bank in New York quoted gold bullion at $354.25 an ounce, down $1.25 from Friday’s bid.

Market operators sold dollars ahead of a Commerce Department report due Tuesday on the gross national product.

Thomas Benfer, a commercial foreign exchange trader for the Bank of Montreal office in New York, said the selling was in anticipation of a weak GNP reading.

“If the economy continues to be as weak as most people now estimate, another discount rate cut may be in the wind,” Benfer said.

The Federal Reserve Board trimmed its chief loan rate by half a point to 6% earlier this month in a bid to stimulate borrowing and spending.