Dollar Rises in Buying Spree; Gold Declines

The U.S. dollar rallied for the second straight day today as dealers scrambled to buy dollars to make up for sales they had made last week in anticipation of the dollar falling.

Gold prices fell on profit-taking.

The dollar had already gained strongly on Monday on fears that Common Market countries would act to strengthen it to bring down the price of their exports.

Last week, with the dollar declining, many dealers sold U.S. currency expecting further falls. But Monday’s surge triggered a rush to buy dollars back, and this sent the dollar higher today, analysts said.

European governments say the dollar’s year-long decline by more than 30% has pushed up the price of their exports and hurt their trade balances. But analysts said the dollar’s long-term trend pointed downward.

They saw little likelihood of West Germany cutting interest rates, which would boost the dollar, and they pointed to a fresh indicator of sluggish U.S. economic performance. The Commerce Department reported that durable goods orders fell 2.6% in August after rising 3.6% in July.

The Labor Department, meanwhile, reported that its consumer price index, unchanged in July, rose 0.2% in August.