The dollar fell against most major currencies Wednesday following a government report showing slower-than-expected growth in the U.S. economy and intervention by central banks.
Gold prices were mostly higher. Republic National Bank of New York quoted a bid of $433.45 for an ounce of gold as of 4 p.m. EDT, up from $431.90 late Tuesday.
Analysts said the dollar fell quickly after the Commerce Department reported that the gross national product rose 3.1% in the second quarter. Analysts said the market had expected a rise to between 3.4% and 4%.
European traders had been scooping up dollars before the report, anticipating a healthier growth in the U.S. economy, but they hurried to dump their dollar holdings once the report was out, dealers overseas said.
"Europeans have been fairly bullish and buying dollars for days," said Chris Bourdain, a trader at Bank of America in New York. But following the report, "the dollar dropped off very quickly on panic selling. They wanted to get out."
Analysts said the West German Bundesbank and the U.S. Federal Reserve intervened in the market, selling dollars and buying West German marks to keep the currency stable.
Central bank intervention as well as statements by European government officials and Commerce Secretary C. William Verity Jr. implied that the dollar was within a recent target range set by the Group of Seven nations, analysts said.
British Pound Rises
The G-7 includes the United States, Britain, Canada, West Germany, France, Italy and Japan.
In Tokyo, the dollar rose 0.35 Japanese yen to a closing 132.50 yen. Later, in London, it fell back to 131.68 yen. In New York, it fell to 131.63 from 132.43 late Tuesday.
The dollar's fall pushed up the British pound despite a larger-than-expected rise in Britain's trade deficit in June.
In London, the British pound was quoted at $1.7265 late in the day, up from $1.7135 late Tuesday. In later New York trading, it cost $1.7288 to buy one pound, more expensive than $1.7075 late Tuesday.
Other late dollar rates in New York, compared to Tuesday's rates, included: 1.8470 West German marks, down from 1.8593; 1.5384 Swiss francs, down from 1.5463; 6.2255 French francs, down from 6.2615; 1,364.00 Italian lire, down from 1,373.25, and 1.2056 Canadian dollars, down from 1.2093.
Other late dollar rates in Europe, compared to late Tuesday's rates, included: 1.8495 West German marks, down from 1.8600; 1.5375 Swiss francs, down from 1.5455; 6.2375 French francs, down from 6.2670; 2.0820 Dutch guilders, down from 2.0975; 1,365.50 Italian lire, down from 1,374.50, and 1.2070 Canadian dollars, down from 1.2083.
Gold and silver prices held within a narrow range. Dealers in Zurich, Switzerland, said the two metals appear to have found some technical support after their plunge on Monday, when gold fell almost $16 and ounce, and silver dropped 55.5 cents.
Gold closed at $433.30 an ounce on the Commodity Exchange in New York, up from $431.10 late Tuesday.
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