Dollar Down in European Trading; Gold Up Sharply

The U.S. dollar reached another postwar low against the Japanese yen Thursday and declined against most other major currencies, despite apparently positive economic data from the United States.

Gold and silver prices rose sharply in reaction to the dollar’s weakness.

Dealers in London said the dollar initially was boosted by news that the U.S. gross national product increased by 4.3% in the first quarter, compared to market expectations of about 2.9%.

But traders said the dollar sold off because the economic indicator apparently was boosted largely by a build-up of business inventories.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to 141.15 yen--its lowest level since modern exchange rates were set in the late 1940s--from Wednesday’s 142.70 yen. Later in London, the dollar traded at 141.20 yen.

Other late dollar rates Thursday, compared to late Wednesday’s rates, included: 1.8130 West German marks, down from 1.8210; 1.4825 Swiss francs, down from 1.4955; 6.0340 French francs, down from 6.0575; 2.0525 Dutch guilders, down from 2.0540; 1,296.50 Italian lire, down from 1,298.75, and 1.3315 Canadian dollars, up from 1.3312.

The British pound rose to $1.6355 from $1.6285.

Gold prices rose sharply in hectic trading, although bullion declined from the day’s highs because of profit-taking and new supplies offered by South Africa.

In London, gold was quoted at a late bid of $454 an ounce, up $9.50 from late Wednesday. Gold closed in Zurich at $453.50.