Gold surged through the $240 an ounce mark in Europe yesterday after the U.S. government decided to reduce the amount of gold in its monthly auctions, but it fell back in New York after a government report indicated the economy was slowing down.

The dollar weakened in Tokyo and Europe on the reduced gold sale news, but then firmed in New York.

Gold closed at $240.375 an ounce in London, up from $239.75 at Wednesday's close. In Zurich, gold closed at $241.375 an ounce against $239.875, but it fell to $238.40 in New York.

In Frankfurt the dollar fell to 1.8892 marks from 1.8942, but rose again to close at 1.8930 in New York.

In Zurich, it fell to 1.7105 Swiss francs from 1.7161, then firmed to 1.7165 in New York.

The dollar was also lower in Paris, where it closed at 4.34225 francs from 4.3570; in Mialn at 841980 lira from 83.45; in Brussells at 30.47 Belgian francs from 30.57 and in Amsterdam at 2.044 guilders from 2.056.

In Tokyo the dollar fell to 215.70 yen, from 217.60 Wednesday.