Profit-Taking, Trader Jitters Pull Dollar Down --- But U.S. Currency Expected To Resume Its Upward Trend; Gold Gains $2.60
The U.S. dollar declined yesterday in response to both profit-taking and trader fears of renewed central bank intervention. But the U.S currency recovered some ground in late New York trading.</br></br>Gold rose for the first time so far this year, gaining $2.60 an ounce in response to the dollar's fall, also the first this year.</br></br>Though the dollar fell back slightly in foreign-exchange trading yesterday, many dealers said they felt it had only halted briefly and might even resume its upward course later in the week.</br></br>"Each of the currencies had its own little reason for strengthening against the dollar (yesterday)," said Fred Katzman, a vice president in New York for Midland Bank of Britain. "There was a rumor that West Germany's Lombard rate (one of that country's two key interest rates) would be raised (when the West German central bank meets a week from tomorrow). And there was also talk about a British base rate increase, which would make sense." The British base rate is a theoretical figure on which all British interest rates are hinged; the most credit-worthy customers usually pay one percentage point more.</br></br>But the fact remains, he added, that "the dollar didn't take enough of a downturn yesterday to justify people unwinding their positions. So the dollar is still a 'buy', in the language of foreign-exchange dealers, and if you're long (bought) on dollars you should hold onto them."