CURRENCY : Dollar Gains Ground, but Traders Remain Cautious

The dollar rose in light trading Wednesday, but analysts warned that the impending release of U.S. trade figures posed another major test for the currency.

Gold prices rose slightly. Republic National Bank in New York quoted a bid for an ounce of gold at $461.40 as of 4 p.m. EST, up from $460.90 late Tuesday.

The dollar continued to draw some strength from President Reagan’s statement Tuesday that he did not want the currency to decline further, said Jack Barbanel, a first vice president with Gruntal & Co.

But there also was caution in the market in advance of today’s release of merchandise trade deficit figures for September, said Alfred Driever, vice president of foreign exchange at Salomon Bros. Inc.

“It’s difficult to assess if the numbers we’re seeing here are real, whether it’s posturing or positioning before tomorrow,” Barbanel said.

He called the dollar’s firmness “encouraging” but said that the trade numbers were “the big test.”

Trade figures have become catalysts for the dollar’s declines ever since the Reagan Administration said it would allow the dollar to fall to help shrink the U.S. trade deficit. When the dollar is lower, U.S. goods are cheaper overseas and foreign imports become more expensive.

Analysts said trading was thin Wednesday because of the Veterans Day holiday.

In earlier European trading, the dollar rose against nearly all key currencies in light activity, pushed higher by technical factors ahead of the trade deficit report. Currency markets also were closed in France and Belgium for national holidays.

Dealers in Frankfurt, West Germany, said the market was expecting the trade deficit to narrow to $15 billion from a $15.7-billion shortfall in August. But the dollar was expected to continue to fall if the deficit was wider than $14 billion, they said.

The dollar has fallen sharply in the last week, hitting postwar lows Tuesday against the Japanese yen, the Swiss franc and the Dutch guilder, a 6-year low against the French franc and a 5-year low against the Italian lire.

After falling to record lows for five consecutive trading days, the dollar rose in Tokyo to close at 134.35 Japanese yen, up from 133.65 yen at Tuesday’s close. Later, in London, the dollar rose further to 135.10 yen, and in New York the dollar rose to 135.05 yen from 134.55 yen late Tuesday.

In London, the British pound fell to $1.7795 from $1.7905 late Tuesday. In later New York trading, the pound fell to $1.78025 from $1.7859.

Other late dollar rates in New York, compared to late Tuesday’s rates, included: 1.6765 West German marks, up from 1.6640; 1.3755 Swiss francs, up from 1.3645; 5.6650 French francs, up from 5.6560; 1,226.50 Italian lire, up from 1,2250.50, and 1.3170 Canadian dollars, down from 1.3181.