The dollar retreated in Europe yesterday but recouped most of the losses in New York after the Federal Reserve drained reserves from the banking system, pushing overnight interest sharply higher. Gold and silver prices rose.

In Zurich gold rose to $315.50 an ounce from $307.50. In London it closed at $318, up from $311. In New York it closed unchanged at $314.50, and the New York Commodity Exchange settled it at $314.80, down from $315.40.

Silver rose to $6.005 an ounce on the cash market in New York from $5.82 and settled on the Comex at $6.021, up from $5.825.

The dollar made a substantial late comeback in New York after the Fed took the unusual action of draining reserves from the banking system the last day of the banking week.

The federal funds rate "moved up from 13 1/2 percent to 17 1/2 percent after the Fed came in," said James McGroarty, senior trader at Credit Suisse, New York. "It took the market totally by surprise . . ."

In London the pound rose to $1.7435 from $1.73 Tuesday, but it fell back to $1.7340 in New York. In Tokyo the dollar fell to 255.55 yen from 257.30, and then came back to 256.65 yen in New York.