The dollar traded in a wide range before falling back in New York yesterday after Federal Reserve Chairman Paul A. Volcker expressed concern over the economy's strength. Gold rose in Europe and was little changed in New York.

With European traders back from a long holiday weekend, the dollar had a mixed showing and ended little changed against the West German mark, the benchmark trading currency.

"But the dollar was all over the place, trading up to 3.1680 German marks and as low as 3.1250 marks," said James McGroarty, vice president at Discount Corp. of New York. "It hovered near the higher levels all day until Volcker's comments brought it down.

"The bond market did very well on those comments, but the dollar fell," McGroarty said. "The Europeans didn't react immediately to the latest failure of a government securities firm, and it's hard to predict what they will do tomorrow."

In London, the pound rose slightly to $1.19825 from Thursday's $1.195, and in New York it was $1.2135, up from $1.2125.

The Canadian dollar fell to 72.84 U.S. cents from 73.08 Monday.

In Tokyo overnight, the dollar fell sharply to 254.35 yen from Monday's 255.95, and in New York it was 254.78, compared with 254.71.