U.S. DOLLAR LOSSES PROPEL BROAD COMMODITY GAINS
  Commodities from gold to grains to
  cotton posted solid gains in a flurry of buying today as losses
  in the U.S. dollar and rising interest rates kindled fears of
  inflation and economic instability.
      Gains were most pronounced on the Commodity Exchange in New
  York, where gold jumped 12.40 dlrs and closed at 436.50 dlrs a
  troy ounce, and silver 22.5 cents to 6.86 dlrs a troy ounce.
      A key factor behind the advance was anticipation that
  inflation will be the only way for the major industrial nations
  to halt the slide in the value of the U.S. dollar, said Steve
  Chronowitz, director of commodity research with Smith Barney,
  Harris Upham and Co., in New York.
      The dollar tumbled one day after top finance officials from
  the seven largest industrial nations reaffirmed their
  commitment to support its value, and despite reports of
  intervention by the U.S. Federal Reserve Bank, traders said.
      Traders said it appears that the industrial nations, known
  as the Group of Seven, lack the ability to change the long-term
  direction of the currency markets.
      "Maybe they have some ideas or plans," said Chronowitz. "If
  they do, it's not evident."
      "It looks like there's no cure but to let the free market
  take values to where they should be.
      "One way or another, we will force our major trading
  partners to stimulate their economies," as a measure to correct
  the mounting U.S. trade deficit, Chronowitz said.
      "I think the markets believe, and have believed for a long
  time, that the only recourse is to reflate at some point. It's
  going to be a long and tedious process, but that's what's
  happening," he said.
      The falling value of the dollar makes U.S. commodities
  cheaper for foreign buyers, stimulating demand.
      At the same time, traders who are holding stocks and bonds
  saw the value of their investments falling and many are turning
  to commodities such as precious metals as a hedge, said Marty
  McNeill, a metals analyst in New York with the trading house of
  Dominick and Dominick.
      The reaction in the metal markets reverberated throughout
  the commodities markets, as grains, livestock, and cotton
  posted broad gains.
      Traders at the Chicago Board of Trade said attention in the
  grain markets has shifted from concern about burdensome
  supplies to the outlook that a lower dollar will stimulate
  export demand.
      After the close of trading, the Agriculture Department
  raised its estimate for grain imports by the Soviet Union by
  two mln tonnes from the month-earlier report.
      Live hogs and frozen pork bellies posted sharp gains on the
  Chicago Mercantile Exchange, while live cattle were moderately
  higher.
      Analysts said several factors boosted hog prices. They said
  hogs haven't been making the weight gains that are normal at
  this time of year, and farmers have been too busy with field
  work to market animals.
  

