Unfounded reports that martial law had been imposed in Poland and a sharp rally in the U.S. bond market pushed gold up to $409 in New York yesterday. The dollar gave ground in a technical slide and dealers said uncertainties over Poland stand to keep it strong.

Gold reacted in early trading in Europe to the threat of martial law in Poland, jumping to $405.50 in London from Monday's $396. At the earlier closing in Zurich it had risen to $400.40 from $393.50 the previous day.

In New York a sharp rally in bond prices fueled gold's rise further to $409 at the close, up $12 from Monday's close. The New York Commodity Exchange settled gold at $409.90, up from $397.30. Silver jumped to $8.99 from $8.63 on the cash market, and it settled on the Comex at $9.036, up from $8.655.

The dollar retreated after Monday's sharp rise in a volatile day that saw it buffeted by reports and rumors regarding events in Poland.

In London, the pound rose to $1.7765 from Monday's $1.7705 Monday, its worst level since October 1977. In New York it rose to $1.7815.