FINANCIAL MARKETS : Currency : Dollar Climbs; Gold Declines

The dollar moved higher Tuesday against most key currencies as traders bought dollars to square their positions in advance of the government’s report on the U.S. merchandise trade deficit for August.

Gold prices fell. Republic National Bank in New York quoted a late bid for gold at $458.75 an ounce, down $3 from late Monday.

The government plans to release the August merchandise trade figures this morning, and currency analysts said traders wanted to adjust their positions before the figures are released.

Marc Chandler, a currency analyst for Dean Witter Reynolds in Chicago, said traders who had borrowed dollars and sold them last week have been buying dollars over the past two days to meet their commitments and avoid getting caught in the volatility that often occurs after trade figures are released.

He said most analysts expected the report to show that the trade deficit had narrowed to between $14 billion and $15.5 billion in August from July’s record $16.5-billion shortfall.

The trade figures are watched closely to see whether the dollar has fallen sufficiently to reduce the nation’s trade imbalance.

The dollar opened higher in Europe after an unidentified U.S. customer bought an estimated $2 billion in the Far East, dealers said. In Asia, the dollar was boosted by several large Japanese buy orders, they said.

In Tokyo, the dollar ended a five-day slide, edging up to 143.90 Japanese yen from 143.85 yen on Monday. In New York, the dollar rose to 143.865 yen from 143.075 yen.

In London, the dollar broke a seven-session decline as the pound fell to $1.6465 from $1.6550. In New York, the pound fell to $1.64595 from $1.6530.

Late dollar rates in New York, compared to late rates Monday, included: 1.8220 West German marks, up from 1.8150; 6.0685 French francs, up from 6.0450; 1.51135 Swiss francs, up from 1.5020, and 1.30475 Canadian dollars, down from 1.3075. A New York quote on the Italian lira was unavailable.

Gold bullion dropped in response to the dollar’s strength, dealers said. On New York’s Commodity Exchange, gold for current delivery fell $2.60 to $459.10.

Silver dropped in London to $7.70 an ounce from $7.80. Silver for current delivery fell 8.8 cents to $7.705 on the Comex.

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