The price of gold bullion fell nearly $10 in Europe yesterday, dropping below the psychologically important $200 an ounce barrier for the first time since summer.
The gold plunge was partly a reaction to further gains by the U.S. dollar in Tokyo, Europe and New York, and a dealer said the united front being presented by the Carter administration appeared likely to keep it on an upward course.
The price of gold closed in London at $196 an ounce, down from $206.875 Wednesday. In Zurich, gold closed at $196.50 compared with $206.375 Wednesday. In New York, gold rose to $198,70 an ounce, but a bullion dealer said the rise was technical. At the end of October, gold hit an all-time high of $245 an ounce.
"The steadier dollar has subjected gold to sizable selling by speculators, and one can look for even sharper movements, " a New York bullion dealer said.
Carter's intervention, after an earlier hands-off policy which foreign exchange dealers interpreted as "benign neglect" of the dollar, has halted the U.S. currency's 18-month slide.
This dollar revival was cited by bullion dealers for the fall in the price of gold, along with profit-taking and a move toward lower prices in advance of next week's U.S. Treasury auction of 750,000 ounces of gold.
Yesterday's prices compare with an all-time closing high of $245.25 in London on Oct. 30 just before Carter's save-the-dollar plan.
Gold is bought through specialist dealers, usually in lots of 4,000 ounces - 10 bars - or 8,000 ounces - 20 bars. In addition to the purchase price, investors must pay commission and storage fees.
Americans were barred from trading in bullion until the end of 1974 when legal restrictions were lifted.
Gold is a traditional hedge for investors seeking to protect their assets from fluctuating currencies, the ravages of inflation and uncertainties of the stock market.
Until the dollar's recovery, the yellow metal had been a true gold mine this year. Those who bought bullion at $69.50 at the start of 1978, saw it soar through the $200 barrier to reach a peak of $245.25 on Oct. 30. That was a $75.75 profit, a 44 percent return on your investment.
But gold, too, can be risky. The price has plummeted more than $48 since Oct. 30.
"The gold market is running a little bit scared," said one London delaer. "The market has to clean itself out." He said this meant that gold may have risen too quickly in value, and although long-range prospects remain good, a shakedown is required.