NEW YORK — The dollar rebounded against most foreign currencies Wednesday after falling in reaction to the Democratic victories in the U.S. elections. Traders attributed the rally largely to speculative buying. Gold prices declined. At Republic National Bank in New York, gold was quoted at $406.25 an ounce, down from $408.75 Tuesday.
The dollar initially fell in early Asian dealings as it became apparent the Democrats would wrest control of the U.S. Senate, raising questions about the effectiveness of the Reagan Administration's economic policies. Later however, traders bought dollars and drove the price back up.
"There was pretty sizable speculative buying in European markets," said Alfred Driever, a currency trader for the investment firm of Salomon Bros. in New York. "There was no particular reason."
Others said there was some feeling that a Democratic-controlled Senate would not necessarily hamper Reagan's administration, which also helped the dollar rebound.