NEW YORK, JUNE 22 -- The dollar's bullish advance gained steam today with substantial gains against most major currencies except the Canadian dollar.

Gold prices dove in response to the dollar's climb. At the Republic National Bank of New York, gold bullion for current delivery was bid at $437.25 a troy ounce, down $8.25 from late Friday' $445.50.

Analysts said the U.S. currency was gaining momentum because traders had become less fearful of inflation and more confident in dollar-denominated assets like stocks and bonds.

"There's a changing psychology in the market when people no longer are afraid to take positions in the dollar," said Mike Ballow of Dean Witter Reynolds Inc. in Chicago.

Ballow said the dollar started strong today in Tokyo, where the trading day begins, and built strength throughout the day.

"We're hitting levels in the {West German} deutsche mark that we haven't seen since the beginning of March," said the analyst.

In late New York trading, the dollar was bid at 1.8465 marks, up from 1.8305 late Friday.

Optimism about inflation was bolstered today by a marked decline in the Commodity Research Bureau's commodity price index, according to J.R. Fredericks, chief financial analyst for G.H. Miller & Co. in Chicago. The index, which measures changes in futures prices for a number of commodities, had touched off fears of rising inflation when it registered big increases several weeks ago.

As those inflation concerns have ebbed, foreign capital has begun to flow back into U.S. investments, Fredericks said, adding that a $24 billion Treasury refunding this week is expected to attract good demand for short- and intermediate-term government securities.

Fredericks said today's dollar rally may have been fueled in part by foreign investors snapping up dollars to buy U.S. securities offered in the refunding.

In Tokyo, the dollar rose to a 10-week high of 145.30 Japanese yen from Friday's 144.49 yen. Later in London, the dollar traded at 145.75 yen, and in late New York trading, it moved to 146.15 yen, from 144.85 yen late Friday.

Other late dollar rates in New York compared with Friday were: 1.5345 Swiss francs, up from 1.5205; 1.3329 Canadian dollars, down from 1.3394; 6.1535 French francs, up from 6.1120, and 1,332.00 Italian lire, up from 1,321.50.

At the Comex in New York, silver bullion for current delivery dropped to $6.710 a troy ounce, from $7.158 late Friday.