Dollar Drops Further; Gold Prices Climb

The dollar slipped further against major currencies Tuesday, extending its decline of the past several days as traders began looking past the Venice economic summit to coming U.S. trade and inflation figures.

Gold prices rose. Republic National Bank in New York quoted a bid for gold bullion of $457.75 an ounce, up from $449.25 late Monday.

Depressing the dollar were expectations that, in light of few new developments at the summit meeting, U.S. trade and inflation figures to be released Friday would show little improvement from previous months, analysts said.

A lack of improvement in the trade deficit could mean further declines in the value of the dollar. A weaker dollar makes U.S. exports more competitive and has been a major weapon in the Reagan Administration’s attempts to trim the trade imbalance.

Sharply higher inflation, as measured by growth in producer prices, also would depress the dollar because it reduces returns on dollar-denominated investments.

More Bearishness

“The bearishness that had ingrained itself in the market for many, many months is starting to show through again,” said Lawrence Kreicher, a vice president for Merrill Lynch Capital Markets.

The dollar’s decline accelerated somewhat once the currency dipped past certain technical support levels that pushed it below its recent trading range, said Joe Cally, a trader for Prudential-Bache Securities Inc.

“I think the key is that nothing’s been coming out of the summit, nothing good anyway,” he said.

In Tokyo, the dollar fell against the Japanese yen for the third straight day, dropping to a closing 142.70 yen from late Monday’s 143.25 yen. Later in London, the dollar traded at 142.55 yen and in New York the dollar dipped to 142.20 yen from late Monday’s 143.60 yen.

In London, the British pound rose to $1.6580 from $1.6400 late Monday.