The dollar advanced against all major currencies yesterday despite lower U.S. interest rates, as interbank dealers responded to the perception that U.S. rates "will not come down that much." Bonds held firm on the lower rates, but gold and silver declined.

In Zurich gold fell to $360.50 an ounce from Monday's $364.50. In London it dropped to $361.50 from $365.50. In New York gold closed at $363, down $1 from Monday's close, and the New York Commodity Exchange settled it at $363.40, down from $364.

Silver continued to drop sharply, closing at $7.82 an ounce on the cash market, down from $7.98, and posting a Comex settlement price of $7.83, down from $7.985.

The dollar's comeback began in Tokyo, the first market to open, where it rallied to 234 yen from 230.60 yen on Monday. Dealers said banks were adjusting "their oversold dollar positions" on the belief that U.S. interest rates will remain high. The dollar gave back one yen in New York to 233.

In London the pound fell to $1.8315 from Monday's $1.8480, and it was rated at $1.8340 in New York.