CURRENCY : Dollar Advances as Demand Heats Up Late in the Session

The dollar finished higher against most major currencies Wednesday in a late surge of buying.

Gold prices ended higher in New York after declining overseas. In New York, Republic National Bank issued a late quote of $391.50 an ounce, up from $390.80 Tuesday.

The U.S. currency started the day by advancing in the Far East but later turned mixed in nervous European trading as the markets awaited results of Friday’s meeting of finance ministers and central bankers from the seven major industrialized nations.

In late afternoon trading in New York, the dollar suddenly shot up, finishing at its highs for the day.

“Some dollar demand came out of the blue,” said Robert Hatcher, vice president of foreign exchange at the New York office of Barclays Bank PLC of Britain.

Analysts said they weren’t certain what inspired the last-minute dollar buying. Some, like Hatcher, suggested that it could have reflected Japanese investors’ interest in the U.S. Treasury Department’s upcoming quarterly refunding. The auctions of Treasury bonds, used to help finance the federal debt, often spur foreign investors to buy dollars in advance to pay for the U.S. securities.

Whatever the reason, the dollar’s late surge had a snowball effect and brought more buyers into the market, traders said.

“Probably a little bit of panic set in,” suggested Michael Dallow, a currency analyst at Dean Witter Reynolds in Chicago.

Dealers said they expect the dollar to trade in a narrow range before Friday’s meeting in Washington of the Group of Seven and the release that day of U.S. unemployment figures for January.