CURRENCY : Gold Closes Higher in Late Rise; Dollar Dips : Bullion Trading Seesaws Across the Globe as It Tracks Day’s Ups and Downs in Energy Futures

The price of gold futures closed slightly lower in New York on Monday after recovering from heavy selling here and in London, where prices touched a 17-month low on falling oil prices.

Bullion sank at one stage to $416.50 an ounce in London, its lowest level since March,, 1987, on concerns that the Organization of Petroleum Exporting Countries was unable to staunch overproduction and soak up the glut of oil on world markets.

At Republic National Bank in New York quoted gold at $421.35 an ounce at 4 p.m. EDT, down 10 cents from Friday.

The dollar also weakened marginally Monday in light trading, reflecting what money brokers called their reluctance to speculate in advance of the government’s market-jolting monthly trade deficit reports.

Holds to Narrow Range

Currency traders said the dollar’s behavior typified a pattern that has emerged in days just prior to the Commerce Department’s merchandise trade deficit reports, which have the potential of setting off sharp selloffs or rallies in the financial markets. The July deficit figures are due Wednesday.

“The dollar stayed in a narrow range today and essentially went nowhere,” said Stuart Yannalfo, senior foreign exchange trader at Refco Inc., a New York commodities futures concern.

“Everybody’s waiting for that trade number,” he added.

The consensus among foreign exchange houses is for a July deficit of between $11 billion and $12 billion, compared to $12.54 billion in June.

But the unpredictability of these numbers has made many traders reluctant to take risky positions in dollars until after the report is issued.

In Tokyo, the dollar edged up 0.47 Japanese yen to close at 133.42 yen. Later in London, the dollar was quoted at 133.50 yen.

By the time trading concluded in New York, the dollar weakened to 133.35 yen, off from 133.61 yen.

The dollar gained against the British pound in London, where sterling was quoted at $1.6958, compared to $1.6980 on Friday. Later in New York, the pound strengthened a bit to $1.6974, more expensive than the $1.6970 price Friday.

Other late dollar rates in New York, compared to levels late Friday, included: 1.8465 West German marks, down from 1.8493; 1.5540 Swiss francs, down from 1.5617; 1.2367 Canadian dollars, down from 1.2396; 6.2815 French francs, down from 6.2890, and 1,378.85 Italian lire, down from 1,382.125.

Other late dollar rates in Europe, compared to late Friday, included: 1.8453 West German marks, down from 1.8490; 1.5535 Swiss francs, down from 1.5620; 6.2775 French francs, down from 6.2865; 2.0817 Dutch guilders, down from 2.0835; 1,378.50 Italian lire, down from 1,379.50, and 1.2395 Canadian dollars, unchanged.

Inflation Concern

Traders were more active in the gold market, which has weakened recently because of speculation about a renewed oil-price war. Prices plunged in Europe but rebounded in New York, tracking the path of energy futures.

Cheaper energy prices could partly erase the effects of inflation, historically a key reason that investors buy gold.

Oil’s rebound suggests that the price remains volatile and it could result in higher inflation. In July, for instance, a surge in energy prices drove the wholesale inflation rate up from the previous month’s levels.

On the Commodity Exchange in New York, gold for current delivery closed at $421.20 an ounce, unchanged from Friday, when prices closed sharply lower.

In Zurich, Switzerland, gold fell to $418 from $429.50. In Hong Kong, gold fell to $419.18 from $424.78.