The price of gold fell in a panicky market yesterday after fluctuating sharply in reaction to the deepening recession and an unfounded rumor that Soviet President Leonid Brezhnev had died.

The dollar also dipped against most major currencies on easing Eurodollar rates triggered by anticipation that the Federal Reserve would report a drop in the U.S. money supply for the latest week.

In Zurich, gold ended trading unchanged at $346.50 an ounce, following a recovery from early losses that sent it as low as $337.50. In London it eased $1 to $343.25.

In New York gold dove $10.25 to $333.75, and the New York Commodities Exchange settled it at $333.40, down from $343.90. Silver dropped 20.5 cents to $7.2850 an ounce and settled at $7.300 on the Comex, down from $7.498.

Gold analysts in London blamed the market's current volatility on declining interest rates, the worldwide recession and heavy selling of gold by oil-producing countries.

In London, the pound climbed to $1.83856 from $1.8280 Thursday and was trading at $1.8295 late in New York.

In Toyko, the dollar closed at 234.45 yen, down from Thursday's close of 235.80, and sold for 234.80 yen late in New York. Exchange sources said the decline was caused by softening U.S. interest rates and expected restrictions by the finance ministry on purchases of foreign-currency-denominated zero-coupon bonds by the Japanese.