The dollar declined broadly in slow trading Friday amid concerns over the U.S. economy and enthusiasm over possible weekend tensions in the Middle East.

Gold prices fell.With New York currency markets closed on Veterans Day, traders stocked up on the U.S. currency in advance of a possible Persian Gulf escalation during the three-day weekend.

The dollar is generally viewed as a relatively safe investment in times of strife. In addition, possible oil shortages resulting from a Persian Gulf strife could hurt Japan's oil-dependent economy and help diminish the yen's value against the dollar, traders said.

But before the day's end, currency trading in New York slowed to a virtual crawl, as investors eyeing the Middle East already had covered their short-dollar positions.

Analysts said a bigger influence was an earlier Labor Department report that showed the nation's "core" inflation rate - the producer price index minus food and energy costs - remained unchanged from September.

Investors sold on this sign of moderating inflation, seeing it as one more reason for the Federal Reserve to ease interest rates to stimulate economic growth. Lower interest rates can have a chilling effect on the value of the dollar.

"You're starting to build up a fairly reasonable case for at least a quarter of a percent cut," said Robert Hatcher, a corporate dealer at Barclays Bank PLC.