Optimism Over Venice Summit : Dollar Gains Strength; Gold Slips

The dollar rose solidly against other major currencies Monday, buoyed by an expectation that world growth would be stimulated by the results of the Venice economic summit next week.

But the currency ended well below the day’s highs on profit taking prompted by a statement by President Reagan, saying that he would push West Germany and Japan to take further steps to boost economic growth.

Traders said the remarks renewed the belief that the White House may push the dollar lower in order to reduce the massive U.S. trade deficit if the two countries, which have large trade surpluses with the United States, do not agree to stimulate their domestic growth.

Gold prices declined in response to the dollar’s strength. Republic National Bank in New York at 4 p.m. EDT quoted a bid price for a gold bullion at $446.50 an ounce, down $3.50 from late Friday.

In Tokyo, the dollar rose to a closing 145.15 Japanese yen from Friday’s 144.15 yen. Later in London, the dollar traded at 145.35 yen. And in New York, the dollar closed at about 145.045 yen, up from late Friday’s 143.75 yen.

The dollar has edged higher over the past week in what a number of traders deem a technical advance before the economic summit meeting.

While many traders expect the meeting of the so-called Group of Seven nations to produce few developments, they are unwilling to take strong buying or selling positions in advance of the summit.

Several weeks after the seven nations agreed earlier this year to coordinate economic policies and stabilize exchange rates, the dollar began plunging on market sentiment that the nations had not formulated any fundamental policies for upholding the accord.

Earl I. Johnson, assistant vice president for Harris Trust & Co. in Chicago, said the dollar came off its highs of the day following a speech by President Reagan, who said the United States and its allies needed to fulfill the currency agreements reached earlier.

“This tells you that those expecting any dramatic new monetary initiatives from the summit will be disappointed,” Johnson said.

James McGroarty, a vice president of Discount Corp., said that in early activity the dollar continued drawing strength from the announcement last Friday by the Japanese government of a $42 billion spending package aimed at stimulating domestic economic activity. A stronger Japanese economy could boost demand for U.S. products.

Also bolstering the dollar was the Federal Reserve’s report, released after the close of trading on Friday, that it spent $4.06 billion--its biggest dollar intervention in more than six years--to support the dollar in foreign exchange in the three months ended April 30.

In London, the British pound rose to $1.6270 from $1.6250 late Friday. Later in New York, sterling fell to $1.6285 from late Friday’s $1.6310.