CURRENCY : Dollar Generally Lower; Gold Declines

The dollar held within a narrow range Tuesday, slipping against all major currencies except the Japanese yen in quiet dealings.

Gold prices fell. Republic National Bank of New York said gold was bid at $428.35 an ounce as of 4 p.m. EDT, down from $429.40 late Monday.

The dollar moved lower in early domestic dealings after the Commerce Department reported its index of leading economic indicators fell 0.8% in July, the largest drop in eight months.

The number was slightly weaker than expected, but the market soon shrugged off the figure. Traders said there was no reaction to a separate report that showed factory orders down 3.5% in July, the worst drop in 18 months.

“We’re entrenched in a narrow range,” said Joseph Cally, a trader at Prudential-Bache Securities Inc.

The only interesting move during the session came against the Japanese yen. The dollar briefly pierced the key 135 level against the yen before settling lower. Traders said a rumor that Japan planned to tax certain stock-trading profits weakened the Japanese currency.

“The market is very much trying to get its claws into something that will give it a new sense of direction, but until that comes, we’ll just kind of flake around,” said Ron Sapiro, head trader at Continental Illinois National Bank & Trust Co. in Chicago.

European traders said they were looking to Friday’s unemployment data for July to liven the currency markets.

But Sapiro noted that many traders may not participate in dealings Friday as they get a jump on the long Labor Day weekend. “Any reaction might just be an exaggeration,” Sapiro said.

Gains in Tokyo

Traders also are concerned that any significant upward move by the dollar will probably be met with a new round of central bank intervention. According to an analyst in London, “The dollar is caught between the possibility of interest rates going up and the certainty of central bank intervention.”

In Tokyo, where trading ends as Europe’s business day begins, the dollar rose 0.19 yen to a closing 134.39. Later in London, it was quoted at 134.45 yen. In New York, the dollar rose to 134.93 yen, from 134.54 yen on Monday.

In London, one British pound cost $1.6910, slightly more expensive for buyers than $1.6840 quoted in European markets late Monday. London’s financial markets were closed Monday for a bank holiday.

In New York, it cost $1.6875 to buy one pound, more expensive than Monday’s $1.6809.

Other late dollar rates in New York, compared to late Monday, included: 1.8664 West German marks, down from 1.8720; 1.5765 Swiss francs, down from 1.5778; 6.3385 French francs, down from 6.3420; 1,3860.00 Italian lire, down from 1,390.50, and 1.2362 Canadian dollars, down from 1.2386.

Bullion Heads Lower

Other late dollar rates in Europe, compared to late Monday, included: 1.8678 West German marks, down from 1.8693; 1.5760 Swiss francs, down from 1.5772; 6.3385 French francs, down from 6.3500; 2.1080 Dutch guilders, down from 2.1120; 1,387.50 Italian lire, down from 1,389.50, and 1.2386 Canadian dollars, down from 1.23935.

Gold bullion for current delivery slipped to $428.80 an ounce on the New York Commodity Exchange from $429.40 at Monday’s close.

In London, gold fell to a late bid of $428.10 from $431.40 bid late Friday, before the three-day holiday weekend. In Zurich, Switzerland, gold closed at a bid $428.50, compared to $432.

Earlier in Hong Kong, where financial markets were closed Monday for a national holiday, gold fell $2.68 an ounce from Friday’s $432.56.

Silver bullion for current delivery fell to $6.490 an ounce on the Commodity Exchange, from $6.520 on Monday. Silver also fell in London, where the metal was trading at a late bid of $6.55, compared to Friday’s $6.64.

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