CURRENCY : Dollar Lifted by Prospect of Bush Victory; Gold Slips

The dollar rose in foreign exchange trading Tuesday as dealers adjusted their positions in anticipation of a presidential victory by Republican Vice President George Bush.

Gold prices fell. Republic National Bank of New York quoted a late bid of $418.75 an ounce, down from $422.25 on Monday.

Dealers around the world attributed the dollar’s gains to increased confidence that Bush would defeat Democrat Michael S. Dukakis in the presidential election.

“The anticipation of a Bush victory has led to some position adjustment ahead” of the official results, said James McGroarty, a vice president at Discount Corp.

“There’s been some anticipatory buying on the feeling that if Bush is elected and there are a fair majority of Republicans in Congress, the dollar could go higher,” he added.

Currency traders have the impression that Bush will extend the prosperity of the Reagan years, while Dukakis’ tough stand on trade issues provokes fears of protectionist legislation. McGroarty noted that foreign investors, therefore, remain more comfortable with the Reagan-era policies.

The U.S. currency also drew some support earlier overseas from rumors that Japanese Emperor Hirohito had died, prompting some players to switch out of yen and into dollars.

Cautious Mood

There was concern that the death of the emperor, who remained critically ill Tuesday, would require businesses to close for a mourning period in Japan, just when currency dealers would be reacting to the U.S. election.

The mood in the market was described as “moderately cautious” by David Ogg, a vice president at Credit Suisse in New York. “Everybody thinks there’s news coming out, but that’s not until the polls close.”

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 0.34 yen to a closing 124.73 yen. Later in London, it was quoted at 125.59 yen. In New York, the dollar jumped to 125.70 yen from 124.63 yen on Monday.

In London, the dollar gained against the British pound. It cost $1.7707 to buy one pound, cheaper than $1.7755 late Monday. In New York, it cost $1.7705 to buy one pound, less expensive than Monday’s $1.7804.

Other late dollar rates in New York, compared to late rates Monday, included: 1.7893 West German marks, up from 1.7772; 1.5026 Swiss francs, up from 1.4888; 6.1060 French francs, up from 6.0675; 1,328.50 Italian lire, up from 1,320.38, and 1.2341 Canadian dollars, down from 1.2358.

Other late dollar rates in Europe, compared to late rates Monday, included: 1.7990 West German marks, up from 1.7840; 1.5005 Swiss francs, up from 1.4965; 6.1065 French francs, up from 6.0815; 2.0190 Dutch guilders, up from 2.0148; 1,330.00 Italian lire, up from 1,327.75, and 1.2350 Canadian dollars, down from 1.2374.

Silver Down

Gold prices slumped. On New York’s Commodity Exchange, the price of one ounce of gold fell to $419.10 from $422.80 on Monday.

In London, gold fell to a late bid of $418.50, compared to $421.75 late Monday. In Zurich, Switzerland, gold closed at a bid of $418.50, compared to $420.65 late Monday. Earlier in Hong Kong, gold rose 40 cents to close at a bid of $422.35.

Silver bullion prices on New York’s Comex slid to $6.393 from $6.490 on Monday. In London, the metal was trading at a late bid of $6.41, compared to Monday’s $6.45.