Gold rose $7 an ounce yesterday on a weaker dollar and concern over unrest in India since the assassination of Indira Gandhi. The dollar's retreat gathered momentum after predictions of lower interest rates by an influential economist.

The dollar had been on a downward path all day, then fell sharply after Henry Kaufman, chief economist at Salomon Brothers, predicted overnight interest rates would drop to 9 1/4 to 9 1/2 percent from the current 10 percent level.

Kaufman's remarks, in his widely followed Comments on Credit, were due for release at 6 p.m. "They leaked in the afternoon and all the markets turned around," a dealer said.

Gold was sharply higher. In Zurich, it closed at $342.50 an ounce, up from $333.50 Thursday. In London, gold also closed at $342.50 up nearly $7 from $335.75.

In New York, Republic National Bank closed cash gold at $343.50 an ounce, up from $336. The New York Commodity Exchange settled the November contract at $343.20, up from $335.90.

Silver jumped to $7.52 an ounce from $7.365 on the cash market; the Comex settled the November contract at $7.518, up from $7.372.

The dollar, which fell under the 3-deutschemark level in New York on Thursday for the first time since Sept. 12, lost ground all around. Trading was thin and dealers said that contributed to the slide.

"Expectations that the prime rate will come down is forcing the dollar down," said a trader in Zurich.

In London, the pound soared to $1.2535 from Thursday's $1.2310. In New York, rose to $1.2601 from $1.2376.

The Canadian dollar jumped to 76.33 U.S. cents from 76.29 cents.

In Tokyo, the dollar fell to 243.20 yen from 245.20, and in New York, it plunged to 241.84 yen from 244.08 Thursday.