Newspaper article THE JOURNAL RECORD

Dollar Falls Sharply; Gold Prices Rise / Silver Also Up

Newspaper article THE JOURNAL RECORD

Dollar Falls Sharply; Gold Prices Rise / Silver Also Up

Article excerpt

NEW YORK (AP) - The dollar fell sharply against all major currencies except the Canadian dollar in domestic trading Tuesday while the Federal Reserve was rumored to have stepped in to stem the currency's decline.

Gold prices rose. Republic National Bank in New York quoted a late bid for gold of $459 a troy ounce, up $5 from Monday's late bid.

Analysts said the dollar broke through key technical levels against the West German mark and the Japanese yen as market sentiment turned bearish toward the U.S. currency.

The dollar tumbled to 146.31 yen in New York, down from 149.33 yen late Monday. Against the mark, the dollar plunged to 1.8443 from 1.8708 in the previous trading session.

Rumors circulated in the market that the Federal Reserve bought dollars during the afternoon to prevent the dollar from eroding further, traders said.

The drop, which continued a decline begun earlier in European trading, reflected a prolonged reaction to a government report Friday that the nation's trade deficit for June had widened to an apparent record $15.71 billion.

``We're still seeing a reaction to that number,'' said James Vick, vice president and senior corporate trader at Manufacturers Hanover Trust Co. ``The trade deficit news triggered the decline, but it also triggered a re-emphasis on the fundamentals of the U.S. economy,'' he said.

The larger-than-expected trade deficit underscored the fact that ``the United States is not out of the woods in terms of its trade imbalance,'' Vick said.

While the dollar remained under pressure throughout the day, dealers said it was lifted slightly from its intraday lows by rumors of the Fed intervention. ``A lot of people thought it wouldn't go this far,'' said Dan Holland, an assistant vice president at Discount Corp. …

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