Dollar Edges Higher; Gold Prices Reverse 2-Day Slide

The U.S. dollar posted modest gains against most foreign currencies Wednesday. Gold resumed its rise in Europe following a two-day decline, and gained more than $8 an ounce.

Currency traders in Frankfurt said trading was dominated by speculation over whether West Germany’s central Bundesbank would lower the country’s discount rate, currently at 3.5%.

A decline in the rate, the interest charged by the bank on loans to financial institutions, could make the dollar a more attractive investment in relation to the West German mark. Traders said there was speculation in both directions.

The dollar was quoted in Frankfurt Wednesday afternoon at 2.0630 West German marks, up from 2.0585 marks late Tuesday.

Other dollar rates compared to late rates Tuesday, were: 1.6735 Swiss francs, down from 1.6783; 6.7475 French francs, up from 6.7325; 2.3280 Dutch guilders, up from 2.3255; 1,421.50 Italian lire, up from 1,419.75, and 1.3865 Canadian dollars, up from 1.3835.

The British pound dipped to $1.4810 from $1.4860.

The dollar closed in Tokyo at 155.50 Japanese yen, marginally down from Tuesday’s 155.97 yen. Later, in London, the dollar eased further, to 154.60 yen.

Gold bullion rose in London to a late bid of $419.50 an ounce, up from $411 late Tuesday. In Zurich, the metal was quoted at a bid of $417.50, up from $411.50.

Swiss traders said gold rose in spurts throughout the day amid some profit-taking. Dealers were uncertain what set off Wednesday’s buying, although one said it may have been spurred by Middle East investors.

Earlier in the day, gold had closed at a bid of $407.22 in Hong Kong, down from $410.49 Tuesday.

Silver bullion rose in London to a bid of $5.82 an ounce, up from $5.72 late Tuesday.