Gold rose to $416 an ounce in London yesterday, its highest price in nearly a month, before plummeting back to near the $400 level. The dollar came under strong selling pressure as traders took profits on its dramatic rise with lessening of political tension in Poland.
Swiss banking sources said central banks took advantage of the profit taking to sell dollars heavily.
In Zurich, gold rose $13 to close at $413.50 an ounce. On the London bullion market it surged to $416 an ounce.
In New York, where gold had traded as high as $418, it fell back sharply to close at $403.50 compared with Tuesday's $409. The New York Commodity Exchange settled gold at $404, down from $409.90. Silver fell to $8.93 from $8.99 on the cash market, and it settled on the Comex at $8.94, down from $9.036.
The dollar took a beating all around, reflecting what many dealers felt was an overreaction on the upside to repeated rumors early this week about Poland.
In London, the pound, which at one point surged to $1.85, closed at $1.818, up 4.15 cents from its Tuesday close of $1.7765. In New York it closed at $1.8120.