Advertisement

Gold Rises $12 an Ounce as Dollar Sags

Share via
From Times Wire Services

The price of gold shot up nearly $12 an ounce in late trading Tuesday, while the dollar slipped.

Some dealers said gold rallied in a belated response to the turmoil in China, but others said technical factors were behind the late spurt. The dollar was actually lower earlier Tuesday in Hong Kong, which is most sensitive to what happens in China.

Republic National Bank of New York said gold was bid at $376.70 an ounce as of 4 p.m. EDT, up from $364.80 on Monday. That brought it back to its levels of early May, but well below January levels, when it was more than $400 an ounce.

Advertisement

After about three months of declining prices, gold and silver posted a solid gain as demand for the metal increased in the aftermath of China’s domestic troubles.

“This is the first meaningful rally in the past three or four months,” said Peter Cardillo, an analyst with Josephthal & Co. in New York. “A lot of people in Hong Kong have been sellers of gold and purchasers of dollars. That has stopped, causing the market to react positively.”

Investors often turn to gold and silver, which are looked upon as more stable investments, as a hedge in times of turmoil.

Advertisement

Another factor in the buying of precious metals was the recommendation by the United States that its citizens leave China, and a slight decline Tuesday in the value of the U.S. dollar, Cardillo said.

There was no major economic news to account for the retreat of the dollar after its gains Monday.

A pattern of sharp, unexplained drops in the dollar indicated that the Federal Reserve might have sold dollars secretly, said Michael McGuinness, an investment officer in foreign exchange at Harris Trust & Savings Bank in Chicago.

Advertisement

Several traders have speculated in the past two weeks that the Federal Reserve and other central banks are trying to get extra impact from their intervention by concealing it more than in the past.

In London, the dollar rose against the British pound. It cost $1.5665 to buy one pound, compared to $1.5815 late Monday. Later in New York the pound rose to $1.5710 from $1.5655 on Monday.

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 1.98 yen to a closing 142.63 yen. Later, in London, it was quoted at 143.28 yen. In New York, the dollar fell to 142.67 yen from 142.95.

Other late dollar rates in New York, compared to late Monday’s rates, included: 1.9735 West German marks, down from 1.9855; 1.7095 Swiss francs, down from 1.7140; 1.2010 Canadian dollars, down from 1.2019; 6.7060 French francs, down from 6.7455, and 1,434 Italian lire, down from 1,442.

Other late dollar rates in Europe, compared to late Monday: 1.9850 West German marks, up from 1.9630; 1.7240 Swiss francs, up from 1.6950; 6.7360 French francs, up from 6.6645; 2.2370 Dutch guilders, up from 2.2010; 1,443.00 Italian lire, up from 1,416.50, and 1.2015 Canadian dollars, up from 1.2003.

Gold rose $9.12 an ounce today on the Hong Kong market, opening at $376.02. It closed at $366.90 Tuesday.

Advertisement

Gold fell in London to a late bid price of $365.25 an ounce, compared to late Monday’s $366.25. In Zurich, gold dropped to a bid of $365.30, compared to $366.00 late Monday.

But on the Commodity Exchange in New York, gold bullion for current delivery rose to $379.90 an ounce from $367.50 Monday.

Silver bullion prices rose on the London market where the metal was trading at a late bid price of $5.28 an ounce, compared to Monday’s $5.31. On New York’s Comex, silver bullion for current delivery rose to $5.431 an ounce from $5.264 on Monday.

Advertisement