The price of gold fell yesterday despite a worsening of the Iran-Iraq conflict, and one theory holds that "the combatants may be selling huge quantities of gold to finance the war."

The dollar fell sharply abroad against all currencies except the yen, but it came back a bit in New York.

In Zurich gold lost $5 on the day to close at $710.50 an ounce.In London it fell back to $708.50 from Tuesday's $716. In NEW york gold fell back to $707.75 from Tuesday's $711.25. The Comex settlement price was $709.50 an ounce compared with $711.50.

Silver plummeted to $22.75 an ounce from $23.30, and it settled at $22.62 an ounce, down from $23.30.

Iraq is known to have plenty of gold to sell. It imported 75 tons from Switzerland during the first seven months of 1979, according to official figures.

The yen plummeted against all major currencies after the bombing of a vital Iranian oil complex. The dollar rose 5.65 yen from Monday's close in Tokyo to 218.20 but fell back 215.70 in New York. Tuesday was a national holiday in Tokyo.

Both sterling and the dollar closed at about their lowest levels of the day in Europe but both rose again in New York.

In London the pound fell to $2.3995 from $2.4025, but it inched back up to $2.4020 in New York.