CURRENCY : Dollar Heads Lower; Gold Prices Rise

The dollar stumbled lower again Friday, but light trading in the currency markets may have spared the currency even greater damage, analysts said.

Gold prices continued their ascent. At Republic National Bank of New York, gold bullion was quoted at $497.25 an ounce at 4 p.m. EST, up from $493.50 late Thursday.

The domestic foreign exchange market was quiet, compared to the violent move of Thursday, when the government announced a record shortfall in U.S. trade during October. The $17.6-billion deficit was the largest on record and well above the estimates of most market observers.

The bad news caused a massive dollar selloff that pushed the U.S. currency down to a postwar low against the Japanese yen and a near-low against the West German mark.

On Friday, the dollar dropped further--to historic lows against both currencies--but it traded in a narrow range. In New York, the dollar was quoted at 128.30 yen, down from 129.06 late Thursday, and 1.6307 West German marks, down from 1.6329.

Outlook Remains Bearish

Analysts said the light activity was not necessarily a sign of calm. They said many traders were only taking a breather after Thursday’s big move, and the outlook for the dollar remained bearish.

In Tokyo, where the trading day begins, the dollar closed at 128.75 yen Friday, down 3.43 yen from late Thursday, despite heavy intervention by the Bank of Japan. Later in London, it was quoted at 128.65 yen.

In London, the dollar also fell against the British pound. It cost $1.8350 to buy one pound, compared to $1.8305 late Thursday. Later in New York, the pound was quoted at $1.8380, up from $1.8355.

Other late dollar rates in New York, compared to late Thursday, included: 1.3297 Swiss francs, down from 1.3317; 5.5400 French francs, down from 5.5505; 1,203.00 Italian lire, down from 1,207.75, and 1.3069 Canadian dollars, up from 1.3053.

The dollar’s weakness continued to strengthen gold, which fetched a late bid price in London of $493 an ounce, up from late Thursday’s $487.50.

In Zurich, Switzerland, gold was higher, closing at a bid of $493.50 an ounce, compared to $488.50 late Thursday. Earlier, in Hong Kong, gold rose $6.66 to close at a bid price of $491.51 an ounce.

At the New York Commodity Exchange, gold bullion for current delivery was quoted at $497.10 an ounce, up from $492.30.

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