Dollar Rebounds Sharply in Europe; Gold Prices Drop

The U.S. dollar staged a sharp recovery in Europe today against all key currencies except the British pound and Canadian dollar.

Foreign exchange dealers said the dollar opened weaker in what dealers said was a reaction to President Reagan’s loss of a Republican majority in the Senate in Tuesday’s elections. But the dollar quickly rallied.

The British pound rose, for the fourth straight trading day, reaching $1.4210 from $1.4155 late Tuesday.

In Tokyo, where it hit a four-month high on Tuesday, the dollar dipped to 163.00 Japanese yen, down from 163.60 yen. Later, in London, the dollar rose to 164.45 yen.

Other late dollar rates in Europe, compared to late rates Tuesday were: 2.0635 West German marks, up from 2.0570; 1.7222 Swiss francs, up from 1.7135; 6.7325 French francs, up from 6.7115; 2.3315 Dutch guilders, up from 2.3245; 1,425.50 Italian lire, up from 1,420.50, and 1.3880 Canadian dollars, down from 1.39025.

In London, the metal fell to $406 an ounce from $408 late Tuesday. In Zurich, it fell to $406.50 from $408.50.

Earlier, in Hong Kong, gold rose to $409.59, up sharply from $405.33.