Dollar Trades Lower; Gold Advances

The greenback was pulling back against the other major currencies as oil and gold prices rallied amid heightened tensions in the Middle East.

One euro was buying $1.5635, up from $1.5494 Thursday. The British pound was selling for $1.9738 vs. $1.9733 in the last session, and the the dollar was trading for 107.3 Japanese yen, down from 107.93 yen previously.

Benchmark bullion futures were tacking on $3.30 at $907.50 an ounce in recent action on the Comex division of the New York Mercantile Exchange. Gold prices tend to rise during in times of geopolitical tension.

Large-scale military maneuvers by Israel are being seen as a dry-run for a potential attack on Iran, explains Ashraf Laidi, chief foreign-exchange strategist at CMC Markets in New York.

"The situation is worsened by bellicose response from Iran stating it would answer an Israeli attack with a 'strong blow,' driving oil prices back above $134 per barrel," he writes in a research report.

The New York Times had an article Friday saying that Israel was conducting military drills American observers think could be a warm-up for bombing Iran's nuclear facilities.

The CurrencyShares Euro Trust(FXE Quote - Cramer on FXE - Stock Picks) was rising 0.9%. The CurrencyShares British Pound Sterling(FXB Quote - Cramer on FXB - Stock Picks) was ahead 0.1%. The CurrencyShares Japanese Yen Trust(FXY Quote - Cramer on FXY - Stock Picks) was up 0.6%.

The SPDR Gold Trust(GLD Quote - Cramer on GLD - Stock Picks), which holds solid gold bars, was gaining 0.9%. In the precious metals patch Barrick Gold(ABX Quote - Cramer on ABX - Stock Picks) was adding 1.5%.