CURRENCY : Dollar Gains Strength in Slow Trading; Gold Drops

The dollar strengthened against all key currencies in quiet holiday trading Monday.

Gold and silver prices fell, with silver dipping to its lowest level in nearly 22 months in London.

Bruce Giammattei, a currency trader for Harris Trust & Co. in Chicago, said near-term sentiment toward the dollar remained somewhat bullish.

“I think there’s a growing feeling in the market that the United States doesn’t really mind seeing a higher dollar at this time,” Giammattei explained. “A higher dollar helps take inflationary pressure off of us by making imports cheaper.”

Traders said the dollar also was boosted by reduced chances for central bank intervention from the United States and Japan because of holidays there. Many U.S. traders were absent from the market in observance of the late Dr. Martin Luther King Jr.’s birthday, a federal holiday.

In London, the British pound fell to $1.7615 late Monday from $1.7770 on Friday. Sterling fetched $1.7610 in New York, down from $1.7660 on Friday.

On the New York Mercantile Exchange, gold bullion for current delivery fell to $402.20 an ounce from $402.30 on Friday. Later, Republic National Bank in New York quoted gold bullion at a bid of $401.80 as of 4 p.m. EST, down from $402.30.

Silver prices rose in New York after falling in London. On New York’s Comex, silver bullion for current delivery rose to $5.890 an ounce from $5.888 on Friday.