Dollar Closes Mostly Higher : Gold Prices Advance as Silver Tumbles
Economic jitters kept precious metals and exchange markets on edge Tuesday, sending gold prices strongly higher in volatile trading while silver fell and the dollar gained against other major currencies.
Republic National Bank in New York at 4 p.m. EDT quoted gold bullion at $451.75 an ounce, up $6.75 from Monday’s late price. At New York’s Commodity Exchange Inc., gold for current delivery closed up $8.70 at $452.20.
Those levels marked sharp turnarounds from earlier price slumps in Asia and Europe. Gold fell $29 in Zurich to a late bid of $447.50 an ounce and dropped $21.50 to $449 in late London trading.
Earlier in Hong Kong, gold fell $14.83 to close at $452.63 an ounce.
Silver, meanwhile, declined all around. Silver for current delivery fell 15.2 cents to close at $7.648 per ounce at New York’s Comex. Earlier in London, silver traded at a late bid of $7.75 an ounce, down from $10.30 late Monday.
Jeffrey A. Nichols, of American Precious Metals Advisors Inc., said silver, in particular, had been the target of a “probably unjustified speculative burst of activity.”
He said the run-up was encouraged by rumors last week of supply shortages from Peru and Mexico. The price then dove Monday in New York, accelerating as the market discounted those rumors, and picking up momentum amid renewed suggestions from Washington that the dollar had fallen enough.
Precious metals--traditionally a hedge against inflation and financial uncertainty--were boosted when the dollar slumped Monday to a new 40-year low against the Japanese yen and to seven-year lows in Europe, dealers there said.
‘Too Far, Too Fast’
Later Monday, White House spokesman Marlin Fitzwater repeated the Administration’s view that it did not favor a weaker dollar.
Nichols said that while gold may have suffered in Europe from having gone “too far too fast,” it rallied in New York because of continuing strong underlying interest in gold as a hedge.
The dollar, meanwhile, continued strengthening in the wake of the Washington comment.
In Tokyo, the dollar rose to a closing 139.45 yen from 138.10 yen at Monday’s close, which had been its lowest level since modern exchange rates were established in the late 1940s. Later in London, the dollar edged up to 139.55 yen. In New York, it rose to 140.10 yen from late Monday’s 139.25 yen.
In London, the British pound fell to $1.6525 from $1.6670 late Monday, after Britain’s four major banks cut their base interest rates from 10% to 9.5% Sterling dropped to $1.6560 later in New York from $1.6580 late Monday.
Other late dollar rates in New York, compared to late Monday’s rates, included: 1.7958 West German marks, up from 1.7928; 5.9880 French francs, up from 5.9865; 1.4685 Swiss francs, up from 1.4675, and 1.3352 Canadian dollars, up from 1.3341. Italian lire rates were unavailable.
Late dollar rates in Europe, compared with late Monday, included: 1.7990 West German marks, up from 1.7820; 1.4677 Swiss francs, up from 1.4600; 5.9925 French francs, up from 5.9650; 2.0265 Dutch guilders, up from 2.0085.
