Gold price: U.S. hopes

Press, Volume CXII, Issue 32819, 20 January 1972, Page 11

Gold price: U.S. hopes

(N.Z.P.A.-Reuter —Copyright; WASHINGTON, Jan. 19.

The Nixon Administration hopes to propose to Congress a formal revaluation of the United States dollar price of gold early next month, but only if further progress is made in negotiating improved trade relations with other industrial nations.

President Nixon’s adviser on currency, the Treasury Under-Secretary for Monetary Affairs (Mr Paul Volcker) said last night that the proposal to increase the official price of gold by 8.57 per cent to SUS3B an ounce from the SUS3S agreed with other

countries last month would, ideally, be made in the first week of February. “But,” he added, “I do not think we can go to Congress until this trade stuff gets into shape, and we see more negotiating progress.” On December 18, the United States agreed to propose this revaluation of gold, which would officially devalue the dollar as part of an international currency realignment. The accord by the Group of Ten, the leading industrial nations, was described by Mr Nixon as “the most significant monetary agreement in the history of the world.”

But so far, American negotiators have apparently failed to win important concessions from other nations on the trade front, a condition which

the Secretary of the Treasury (Mr John Connally) said in December must, precede implementation of the Group of Ten agreement on an official increase in the gold price.

Mr Volcker forecast continuing strong deficits in the American balance of payments, and an exceptional deficit in the Budget for the present fiscal year, ending on June 30. He attributed the recent poor performance of the dollar in foreign exchange markets partly to the unattractively low interest rates in the United States, which, he said, dissuaded holders from sending their funds to America.

But Mr Volcker emphasised that he was not worried about the apparent weakness of the dollar.