CURRENCY : Gold Returns Above $400 While Dollar Holds Steady

Gold prices climbed back above the $400-an-ounce level in New York trading Wednesday, while the dollar marked time as traders awaited the release of new economic figures.

Republic National Bank of New York quoted a bid of $400.30 for an ounce of gold as of 4 p.m. EDT, up $2.70 from late Tuesday’s $397.60.

On the Commodity Exchange, gold rose to $400.80 from $398.10 on Tuesday.

Gold prices rose as traders followed the fortunes of crude oil futures, said Jim Paul, director of futures research at Dean Witter Reynolds Inc. in Chicago.

Bullion traders have been selling recently as the price of oil plunged. Lower oil prices are a harbinger of lower inflation and reduce the attractiveness of gold, which is a traditional hedge against higher inflation.

Oil prices continued to skid Wednesday, but Paul said gold traders were heartened by the fact that the near-term contract for West Texas Intermediate, the benchmark U.S. crude, struggled back from its lows of the day. The contract closed down 47 cents at $12.60 a barrel, after having been down nearly 80 cents at one point.

“The fact that (oil) was down 80 cents makes 40 cents look not too bad,” Paul said.

Silver Recovers

Gold was down in earlier overseas trading. It fell in London to a late bid of $396, compared to late Tuesday’s $397.45. In Zurich, Switzerland, gold closed at $395.40, compared to $396.90.

In Hong Kong, gold fell $1.77 to close at a $400.46.

Silver rose in New York after falling in London. Silver closed at $6.298 an ounce on the Commodity Exchange, up from late Tuesday’s $6.248. In London, silver traded at $6.19, compared to Tuesday’s $6.23.

Meanwhile, the dollar was little changed in light trading.

“I think we’re just poised and waiting to see how the unemployment numbers come out on Friday,” said Jack Barbanel, a first vice president with Gruntal & Co. in New York. “Most of the trade stayed on the sidelines.”

The Labor Department is scheduled to release September unemployment figures on Friday. Barbanel said dollar traders are also waiting for the Commerce Department’s report next week on the trade deficit.

Drops Against Pound

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 0.33 Japanese yen to a closing 133.48 yen from Tuesday’s 133.15 yen. Later, in London, it was quoted at a higher rate of 133.65 yen, and in New York, the dollar rose to 133.38 yen from 133.31 yen.

In London, the dollar fell against the British pound. It cost $1.6955 to buy one pound, more expensive than $1.6945 late Tuesday. The dollar was marginally higher against the pound in New York, where sterling was quoted at $1.69385, down from $1.6952 late Tuesday.

Other late dollar rates in New York, compared to late Tuesday’s prices, included: 1.86475 West German marks, up from 1.8646; 1.5826 Swiss francs, down from 1.58265; 6.3440 French francs, down from 6.3460; 1,3900.00 Italian lire, up from 1,389.50, and 1.20945 Canadian dollars, up from 1.2082.

Other late dollar rates in Europe, compared to late Tuesday’s rates, included: 1.8625 West German marks, up from 1.8610; 1.5865 Swiss francs, up from 1.5775; 6.3540 French francs, up from 6.3285; 2.1020 Dutch guilders, up from 2.0950; 1,390.475 Italian lire, up from 1,385.875, and 1.2075 Canadian dollars, down from 1.20965.