Commodities Wednesday Jan. 28, 1987 : Jitters Hit Precious Metals

Jitters over the value of the dollar sent reverberations through precious-metal and interest rate futures markets Wednesday.

In other markets, cotton plunged the limit allowed for daily trading, grains and soybeans were lower and livestock were mostly higher.

Treasury bond futures moved strongly upward while the metals posted substantial losses, with both moves attributed to a rumor--later denied--that a meeting of the “Group of Five” nations to deal with the falling dollar was imminent.

Bond futures on the Chicago Board of Trade opened weaker “because the dollar just got shellacked overnight,” said Larry Morgan, an analyst in Chicago with Dean Witter Reynolds Inc.

“Then in midmorning,” Morgan said, “a rumor started going around, that Treasury Secretary James Baker was clearing off his calendar, ostensibly to zoom off to a G-5 meeting to save the dollar or something. Within a few minutes, the dollar firmed a lot, the (West German) mark went to new lows and that put a lot of strength in bonds.” While the rumor was strongly denied and foreign currencies recouped somewhat, Treasury bonds kept getting stronger, Morgan said.