The dollar fell again yesterday but held above key support levels as dealers awaited a series of economic reports next week. Gold eased back on the modest rise in producer prices.
The dollar has lost more than 13 percent of its late-February early-March highs of roughly 3.47 German marks, dropping in excess of 3 percent this week to its current level of 3.055 marks.
The British pound, which just a month ago was nearing parity with the dollar at about $1.04, closed at $1.2530, up from Thursday's $1.247. In New York, it eased back to $1.2551 from $1.2571. Dealers said sterling would have moved above $1.26 had it not been for a cut in interest rates by two of Britain's leading banks.
"The sentiment is clearly bearish at this point," said Earl Johnson, vice president at Chicago's Harris Bank.
"But government statistics coming out next week will tell the tale," he said. "If they show some strength, the market isn't ready to test 3.00 German marks, but if they confirm sluggishness, people are saying the dollar could drop right through that key point," Johnson said. Several key indicators, including producer prices, housing starts, and the revised GNP, will be released next week.
Gold was down to $329.50 in Zurich from $331.50. In London, gold closed at $329 against $331.25. Republic National Bank in New York closed cash gold at $328 an ounce, down from $332.25.