The price of gold continued to rise sharply today, spurred in part by Tuesday's announcement from Treasury Secretary G. William Miller that the United States would not sell any more of its gold stockpile in the near future.
In New York, the price of gold closed at $744 an ounce, $31.50 more than Tuesday and about $300 more than a month ago.
Nevertheless, the closing New York price was below the highs reached earlier in the day in European trading. At the morning London fixing, gold hit $765 an ounce. But as the day wore on and dealers digested the Treasury announcement -- the price slipped back. By the end of the London trading day, the price was $752.
While gold continued to climb in price, silver fell 60 cents an ounce to $45.70 in New York. Platinum, the other major precious metal, rose $12.90 to $882.30.
The U.S. dollar, which has remained strong throughout most of the month-long explosion in gold prices, declined slightly in what dealers called active trading in Europe.
Although the surge in the price of gold has attracted the attention of many individuals, rising gold prices have little effect on the lives of the average citizen, especially because the dollar has remained stable. In earlier gold booms, the dollar usually fell and, as a result, import prices rose.
Now, the major impact of the gold price increase can be seen in jewelry prices. Increases in the price of silver, which has a wider industrial use than gold, will hit the average American harder. Recently film manufacturers announced big price increases -- silver is a major component of the photographic film.
In other developments:
The Treasury confirmed that representatives of the big five industrial countries -- the U.S. Great Britain, West Germany, Japan and France -- met secretly in Washington Monday to discuss international economic issues among them the surge in gold prices. However, sources said, the countries decided that nothing had to be done to stem gold prices.
The Commodities Future Trading Commission, which regulates futures trading in gold, said that it is not considering shutting down gold trading, but is monitoring the market.
The Chicago Board of Trade increased the range in which gold futures prices may trade on any given day and raised the size of the down payment (margin) investors must maintain on gold futures contracts. The margin increase was imposed to cut down gold speculation.
Analysts said that while Miller's statement on gold sales -- apparently made after the Big Five conference -- triggered a gold price surge, continuing turmoil in Iran and Afghanistan and concern about the stability of Middle East regimes are the fundamental causes of the increase.
Most of the demand for gold comes from Middle East investors, although as the price continues to spurt, evergold conscious Europeans and neophyte Americans are climbing on the band wagon.
Precious metal dealers that trade with the public, such as Deak-Perera, report a big increase not only in gold purchasers but in individuals selling gold jewelry and silver pieces.
Both the gold and silver markets are reacting abnormally, experts say, because investors are not buying gold with the usual notion of selling it at a higher price later. Instead, the Middle Eastern investors especially are buying it and stashing it away as a hedge.
"What will make the price surge end? At present, nothing," said Nicholas Deak, president of Deak-Perera.
In the foreign exchange markets, the dollar slipped in West Germany, closing at 1.7216 marks from 1.7280 on Tuesday. In Switzerland, the dollar could buy 1.5840 francs today compared with 1.5930 francs on Tuesday. The dollar closed at 237.9 Japanese yen, down from 239.5 on Tuesday.
But in London, the pound fell against the dollar. The pound was worth $2.2692 today compared with $2.2760 Tuesday.