Dollar Goes Into Tailspin; Gold Falls $6.50 an Ounce

The dollar went into a tailspin Friday after the government announced a widening in the U.S. trade gap in June to $15.7 billion, more than $2 billion higher than market expectations.

Gold prices also retreated. Republic National Bank of New York quoted gold bullion at $451.50 an ounce, down $6.50 from Thursday’s close.

Currency dealers said the dollar tumbled in Europe and the United States immediately after the trade report was released, falling below the psychologically important 150-yen level in both markets.

At its lowest point domestically, the dollar had slipped to 149.40 yen, said Karen Gibbs, an analyst with Dean Witter Reynolds Inc.

The dollar rebounded somewhat later in the day, partly due to bargain hunting and fears that the U.S. currency would rise again should tensions in the Persian Gulf flare up, Gibbs said. The dollar is often considered a safe haven during times of international turmoil.

In Tokyo, where trading ends as Europe’s business day begins, the dollar gained ground, closing at 152.40 Japanese yen from Thursday’s rate of 151.38 yen. But later, in London, after the trade report came out, the dollar was quoted at 149.85 yen. In New York, the dollar stood at 149.935 yen, down from 151.575 Thursday.

Other late dollar rates in New York compared to late Thursday were: 1.87775 West German marks, down from 1.88950; 1.5600 Swiss francs, down from 1.5702; 1.32925 Canadian dollars, up from 1.32775; 6.2715 French francs, down from 6.3115; and 1,360 Italian lire, down from 1,368.