CURRENCY : Dollar Rallies in Europe, Then Fizzles in N.Y.; Gold Prices Rise

NEW YORK —  The dollar fell slightly Wednesday after bearish sentiment pulled it down from gains posted earlier in trading in Europe. Gold prices rose.

“It was a war between the bulls and the bears,” said Zlatko Glamuzina, chief currency dealer of Banco di Sicilia in New York.

The early rise in the dollar was based partly on expectations that the Federal Reserve would push up U.S. interest rates to control inflation. But a report to the Federal Reserve on Wednesday said there was no indication that inflation was getting out of hand, Glamuzina said.

In addition to the report to the Fed, the dollar was hurt by a big sell order and by action by the Bank of England, whose attempts to keep the British pound from rising against the West German mark had the effect of pressuring the dollar, Glamuzina said.

Foreign exchange dealers said trading was light and traders were reluctant to take big positions ahead of new U.S. economic statistics due today and Friday.

The Commerce Department is scheduled to report today on the index of leading economic indicators for October, and the Labor Department is scheduled to report Friday on the November unemployment rate.

The Canadian dollar strengthened against the dollar, prompting the Bank of Canada to sell the currency.

In Tokyo, the dollar closed at 121.85 Japanese yen, down from 122.15. In London, the dollar traded at 122.05 yen. In New York, the dollar fell to 121.48 yen from 121.83.

In London, one British pound cost $1.8480 late Wednesday, more expensive for buyers than Tuesday’s late $1.8425. Later in New York, the pound rose to $1.8535 from $1.8443.

Other late dollar rates in New York, compared to late Tuesday’s rates, included: 1.7318 West German marks, down from 1.7348; 1.4498 Swiss francs, down from 1.4500; 1.1834 Canadian dollars, down from 1.1913; 5.9195 French francs, down from 5.9310, and 1,279.50 Italian lire, down from 1,282.50.

Other late rates for the dollar in Europe, compared to Tuesday’s late rates, included: 1.7375 West German marks, up from 1.7285; 1.4548 Swiss francs, up from 1.4481; 5.9327 French francs, up from 5.9125; 1.9590 Dutch guilders, up from 1.9530; 1,284.97 Italian lire, up from 1,281.25, and 1.1872 Canadian dollars, down from 1.1930.

Dealers said trading in gold was light and the improvement was due to a rise in the price of platinum.

Gold in Hong Kong closed at a bid of $422.62 an ounce, up from $421.93.

Gold closed in London at $423.25, up from $422.75. The closing price in Zurich, Switzerland, was $422.30, up from $422.25.

On the Commodity Exchange in New York, gold bullion for current delivery rose to $424.80 from $421.90.

Later, Republic National Bank of New York said gold rose to $424.10 from $421.50.

Silver bullion traded late in London at $6.14 an ounce, up from $6.09. On New York’s Comex, silver rose to $6.136 from $6.030.

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