Dealers rush for gold and pounds

Press, 20 July 1979, Page 5

Dealers rush for gold and pounds

NZPA-Reuter London Holders of United States dollars remained nervous on Wednesday, and the rush to convert them caused the dollar to plunge in value, and the price of gold to soar to a record price of more than $3OO an ounce.

The pound sterling reached a four-year high of $2.29 at one stage in London as operators on foreign-ex-change markets fled from the dollar, some buying gold but many buying sterling, which dealers said had become the main paper currency alternative to dollars at the moment. The main reason for the latest sharp dollar fall was the development in Washington on Tuesday, when President Carter’s entire cabinet, and all senior staff members, offered to resign,

leaving the president, clear to choose a new team. The news caused widespread, and heavy, selling of dollars around the world. However, the dollar later rallied somewhat, helped by some of the European central banks which intervened on the markets to buy dollars. mainly with marks.

The dollar has been weakening since Mr Carter’s energy speech on Sunday night, reflecting some disappointment in his energy programme, which included curbs on oil imports, and a drive for alternative power sources.

Dealers think that the Carter programme was not tough enough, and not quick enough in its impact on United States trade deficits. There was also disappointment that Mr Carter was not showing signs of tackling United States in-

flation, and associated money-supply problems. The price of gold was fixed on the London bullion market at a record price of 8U5303.85 an ounce, a gain of around $5.60 an ounce, but it later fell back to an afternoon fix of $302.15 an ounce. Silver bullion was also quoted in London at record prices ranging between $9.61 and $9.63 an ounce, up about 20c an ounce. It eased later to around $9.56 an ounce. On European foreign-ex-change markets the pound sterling went to $2.2935 before profit-taking clipped it to around $2.2768, up from $2.2685. Across Europe, the dollar traded at $1.8031 West German marks (compared with 1.8127) despite the West German Bundesbank buying about S2OM.