CURRENCY : Gold Plunges in U.S. Trading; Dollar Climbs

Gold prices fell sharply Friday as a late flurry of selling took hold after the metal had posted gains overseas.

Republic National Bank of New York said gold bullion was bid at $449 an ounce as of 2:30 p.m. EDT, down from $456.75 late Thursday.

Traders said weaker commodity prices pushed gold sharply lower. One trader described the drop as “a big shakeout for gold.”

Oil prices took another hit, falling below the $17-a-barrel mark as the upcoming meeting of the 13-nation Organization of Petroleum Exporting Countries kept the market under pressure.

Dealers also said gold prices fell because of a report that surfaced late in the day that Venezuela plans to sell up to 1 million ounces of gold bullion.

The dollar rose in domestic dealings after falling overseas as traders wound down their positions ahead of next week’s report on the U.S. trade deficit. Traders said the Labor Department’s report Friday that wholesale prices rose a moderate 0.5% in May had no effect on the currency market.

“There was absolutely not much going on,” said Lou Calvello, a trader at Prudential-Bache Securities.

“There was the basic squaring of positions going into the weekend, and ahead of the trade figures,” he said. The government is scheduled to issue its merchandise trade report Tuesday.

Dollar Lower in Europe

“We should see a lot of action after the trade figures are released, depending on what they are,” Calvello said.

Trading also was quiet in Europe, where the dollar finished lower.

Earlier in Tokyo, the dollar closed at 124.85 Japanese yen, down from 125.43 yen. In London, the dollar traded at 124.85 yen, the same level as in Tokyo.

But in New York, the dollar closed at 124.88 yen, up from 124.60 yen on Thursday.

In London, one British pound cost $1.8175 late Friday, more expensive than Thursday’s late $1.8117. Later in New York, it cost $1.8178 to buy one pound, cheaper than $1.8215 on Thursday.

Other late dollar rates in New York, compared to late Thursday, included: 1.7211 West German marks, up from 1.7143; 1.4390 Swiss francs, up from 1.4308; 5.8135 French francs, up from 5.7935; 1,278.88 Italian lire, up from 1,274.50, and 1.2200 Canadian dollars, up from 1.2195.

Other late rates in Europe, compared to Thursday’s late rates, included: 1.7180 West German marks, down from 1.7230; 1.4355 Swiss francs, down from 1.4370; 5.8040 French francs, down from 5.8155; 1.9280 Dutch guilders, down from 1.9330; 1,278.50 Italian lire, down from 1,280.50, and 1.2190 Canadian dollars, down from 1.2211.

Gold prices were mixed.

On New York’s Commodity Exchange, gold for current delivery fell to $449.10 an ounce from $457.10 late Thursday.

The late bid in London was $456.20, up from $455.25. In Zurich, Switzerland, the late bid was $458, up from $455.50. Earlier in Hong Kong, gold closed at $457.99, up from $456.59.

Silver bullion finished at $6.985 an ounce on New York’s Comex, down from $7.145 on Thursday. In late London dealings, the metal was bid at $7.17, up from $7.08.