CURRENCY : Dollar Mixed, Gold Prices Drop as Investors React to Falling Oil Prices

Gold prices fell and the dollar turned mixed against major foreign currencies in sluggish trading Monday as traders reacted to falling oil prices.

Republic National Bank of New York said gold bullion was bid at $445 an ounce as of 4 p.m. EDT, down from $450 an ounce late Friday.

The drop in oil prices cooled fears of inflation, and that helped cause the fall in the price of gold. But currency traders reacted with uncertainty to the news on oil.

Foreign exchange trading was quiet because of holidays abroad. London markets were closed Monday for a bank holiday, and there was nothing for the New York market to lead into because the Tokyo market was to be closed today, Wednesday and Thursday.

“It was very, very quiet,” said Robert A. White, a vice president at First Interstate Bank of California in Los Angeles.

Lower oil prices often hurt the dollar’s value, partly because most oil is bought with dollars. Also, the United States benefits less from cheaper oil than the import-reliant economies of Japan and Western Europe.

Oil traders reacted to the news that the Organization of Petroleum Exporting Countries ended a meeting with no agreement on a proposed 2% cut in the group’s oil production.

On the New York Mercantile Exchange, West Texas Intermediate crude, the benchmark U.S. oil, slid to $17.14 per barrel for June delivery, down 85 cents from Friday’s close.

In Tokyo, where the business day ends as Europe’s begins, the dollar rose 0.51 Japanese yen to a closing 125.33 yen from 124.82 yen on Thursday. Later, in Europe, the dollar was quoted at 125.20 yen. At the end of the trading day in New York, the dollar stood at 124.83 yen, down from 125.14 yen late Friday.

Also in Europe, the dollar gained more than a cent against the British pound. The British pound was quoted at $1.8645, compared to $1.8785 on Friday. In New York, the pound fell against the dollar to $1.8723 from $1.8755.

Other late dollar rates in New York, compared to late Friday’s rates, included: 1.6783 West German marks, up from 1.6773; 1.3974 Swiss francs, down from 1.3978; 1.2326 Canadian dollars, up from 1.2290; 5.7000 French francs, up from 5.6965, and 1,248.83 Italian lire, up from 1,248.00.

Late dollar rates in Europe, compared to late Friday’s rates, included: 1.6810 West German marks, up from 1.6725; 1.4015 Swiss francs, up from 1.3910; 5.7153 French francs, up from 5.6805; 1.8860 Dutch guilders, up from 1.8745; 1,251.60 Italian lire, up from 1,242.00, and 1.2315 Canadian dollars, up from 1.2280.

In Hong Kong, gold fell $2.06 an ounce to close at a bid $450.30.

Gold in Zurich, Switzerland, was also lower, closing at a bid of $446, compared to $449 on Friday. On New York’s Commodity Exchange, gold bullion for current delivery was bid at $445.60, down from $451.

On New York’s Comex, silver bullion for current delivery was bid at $6.353, down from $6.498.