Dollar Gains On M1 Increase; Gold Rises $3.30
The U.S. dollar firmed against most major foreign currencies yesterday because of a sizable increase in M1, the basic U.S. money-supply measure.</br></br>The $2.8 billion rise in M1, in line with market expectations, could push the Federal Reserve to tighten credit conditions, putting upward pressure on U.S. interest rates. Higher U.S. interest rates help the dollar by making dollar-denominated investments look more attractive.</br></br>In late New York trading, the dollar stood at 3.1585 West German marks, up slightly from Wednesday's quote of 3.1465 marks. The British pound edged down to $1.2023 from $1.2060.</br></br>Gold rose $3.30 an ounce, to settle on the Commodity Exchange in New York at $320.10 an ounce. Contracts for all deliveries amounted to a light 2.8 million ounces. Ron Hersch, manager of the metals department of Shearson Lehman Brothers Inc., attributed the price rise to "some bookkeeping in advance of the holiday weekend."</br></br>In early trading in Tokyo Friday, the dollar rose against the Japanese currency to 254.425 yen from 253.88 in New York yesterday afternoon.