The price of gold fell yesterday but held firm above the $550-an-ounce level shortly before the close in New York. The British pound plunged more than 3 cents against the dollar after Prime Minister Margaret Thatcher hinted at lower U.K. interest rates.
Gold closed at $553 an ounce in London, down from $558.50 Monday. In New York it was trading at $555 an ounce shortly before the close compared with Monday's close of $560.
New York dealers said gold began to weaken in early European trading as profit takers moved in to take advantage of the sharp rise. Gold traded in a range of $546 to $560, and dealers said there was good demand, especially at the lower levels.
In London sterling was hit by what was called a misinterpretation of remarks by Thatcher that Britain's contribution to the European Economic Community budget would allow interest rates to fall. Monetary authorities said later the statement didn't imply a change in the government's tight monetary policy.
The high interest rates in Euro-sterling and sterling-demoninated securities -- exceeding 17 percent -- have been credited with drawing funds from the dollar to the pound.
The pound dropped to $2.3040 at the close from $2.3375 Monday.