Dollar, Gold Prices Take Drop
NEW YORK — The dollar tumbled Wednesday because of signs of U.S. economic weakness, the rumored death of Libyan leader Col. Moammar Kadafi and a fear that some Arab nations were selling their U.S. currency holdings.
Gold prices also fell in active trading, caused partly by the Kadafi rumors and falling oil prices, dealers said.
Republic National Bank quoted gold at $339.25 an ounce at 4 p.m. EST, down from $341 bid late Tuesday.
The dollar’s slide accelerated after the release of Commerce Department statistics that showed housing starts declined last month and business capital spending would increase only slightly this year.
Traders said the dollar also was pressured by fear that first-quarter gross national product figures, due to be released today, would indicate poorer economic growth than the Reagan Administration has predicted.
As a result, some traders speculated that the Federal Reserve Board would cut the discount rate, the charge on Fed loans to commercial banks.
This could push interest rates generally lower and theoretically invigorate the economy, but it also could make dollar-denominated investments worth less.
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