Narrowing of Japanese Trade Surplus Gives Dollar Boost; Gold Up $5 an Ounce

The dollar rose against most major currencies Thursday in light trading dominated by concerns about the U.S. trade deficit. Prices of precious metals jumped.

Republic National Bank of New York said gold was bid at $462.50 an ounce as of 4 p.m. EDT, up more than $5 from $457.10 an ounce at the same time Wednesday.

The dollar was boosted somewhat by a narrowing in Japan’s trade surplus and more so by speculation that U.S. trade deficit figures to be released Friday might be better than earlier thought.

Several analysts said the overall market seemed to be expecting the United States’ July merchandise trade surplus to be about $16 billion, although estimates and rumors ranged from $12 billion to $20 billion.

Presumably a number much above $16 billion would push the dollar down and a lower one would give the dollar a boost. But markets are apt to react in contrary ways.

Even $16 billion would be the highest monthly trade deficit ever, breaking the apparent record of $15.7 billion set in June.

“I learned a long time ago not to trade on news that’s two months old,” namely the July trade figures, said Bruce Kamich, a technical analyst of the bond market with McCarthy, Crisanti & Maffei Inc. “There are many things that move markets, many of which are not quantifiable.”

Japan’s Finance Ministry said Thursday the nation’s unadjusted trade surplus fell to $5.15 billion in August from $6.99 billion in July and $7.48 billion in August, 1986. It was the fourth consecutive monthly decline from year-earlier levels.

Gold prices seemed to be dragged upward by a jump in silver prices, said Lawrence Schoen, director of Midland Montagu Metals in New York, a division of London-based Midland Bank.

Schoen said the jump in silver seemed to be the result of a few big purchases making a splash in thin trading. Once silver jumped, holders of short positions who were betting on a decline rushed to protect themselves by buying silver, reinforcing the rise, Schoen said.

In London, the British pound fell to $1.6460 from $1.6570 late Wednesday. Later, in New York, the pound edged down to $1.6466 from $1.6467 late Wednesday.

In Tokyo, the dollar closed at 142.65 yen, up from 141.45 yen on Wednesday. Later, in London, the dollar fell to 142.30 yen. At the end of the trading day in New York, the dollar rose to 142.42 yen from 141.82 late Wednesday.

Other late dollar rates in New York, compared to late Wednesday, included: 1.8045 West German marks, up from 1.8008; 1.4925 Swiss francs, up from 1.4909 Swiss francs; 6.0388 French francs, up from 6.0250; 1,308.00 Italian lire, up from 1,304.50; and 1.3175 Canadian dollars, down from 1.3227.

Other late dollar rates in Europe, compared to late Wednesday included: 1.8045 West German marks, up from 1.7965; 1.4938 Swiss francs, up from 1.4830; 6.0375 French francs, up from 6.0010; 2.0305 Dutch guilders, up from 2.0180; 1,307.75 Italian lire, up from 1,299.35; and 1.3225 Canadian dollars, up from 1.3193.

On the Commodity Exchange in New York, gold bullion for current delivery rose to a late bid of $463.10 an ounce from $456.90.

Earlier, gold rose in London to a late bid price of $460 an ounce from $457 bid late Wednesday.

In Zurich, gold also rose to $460, up from $457.50 bid late Wednesday.

In Hong Kong, gold edged up to a closing bid of $458.30 from $458.24 on Wednesday.

On New York’s Comex, silver bullion for current deliver rose to $8.040 an ounce, up 52 cents from $7.520 an ounce late Wednesday. Silver rose in London to a late bid of $7.61 an ounce from $7.52 bid late Wednesday.