Gold and silver plunged to their lowest levels since August 1979 yesterday as higher U.S. interest rates removed any incentive to hold metals and at the same time pushed the dollar to new high levels.

In Zurich, gold fell $8 to $309.50 an ounce. In London, it hit $305.50, down from $317.25 Wednesday. In New York gold traded as low as $304 before climbing back to close at $308, from $317. The New York Commodity Exchange settled it at $307.70, down from $316.50, and dealers look for further downward pressure.

Silver plunged to $5.13 an ounce from $5.48. It settled on the Comex at $5.137, down from $5.485.

The dollar soared on foreign markets and got an additional boost in New York when the overnight federal funds rate remained at the 14 3/8 percent level despite actions by the Federal Reserve to supply reserves to the banking system.

In Tokyo, the dollar soared to 254.40 yen from 251.55, its highest level since April 1980, and traded at 254.95 in New York.

In London the British pound fell to $1.7435 from $1.7505 and plunged to $1.7390 in New York. In Paris the dollar rose to 6.789 French francs from 6.7435 (6.7857 in New York).