Gold prices are headed lower, with no apparent signs of a halt to selling in sight despite this week's freefall to 1986 lows, market analysts said Friday.

''There is no indication that the market has found a bottom, so we're likely to continue to move lower," said William O'Neill of Merrill Lynch.He said the "ever-present threat" of sales by the Soviet Union, the world's second-largest gold producer after South Africa, continues to keep the market on edge.

The gold market paused Friday, with the spot price in New York unchanged at $354.60 an ounce after tumbling $11 an ounce last week to the lowest since August 1986 on talk of Soviet bullion sales.

Traders are also worried that any recovery in gold prices may attract aggressive selling by the Soviet Union. They said the Soviet Union traditionally sells gold to fetch hard currency to buy Western supplies.

But the spotlight recently has been on the Soviet Union's huge debt load, estimated at $2 billion, amid concern that Moscow may step up gold sales to pay its unpaid bills.

Traders said gold prices have also been hurt by the slowdown in the U.S. economy and a rising dollar.

Analysts said the price drop has put the metal at technically dangerous levels that may unleash heavy selling.

Mr. O'Neill pegged psychological support at $350 an ounce, with the next true technical cushion at $335. "If we break that, $320 is the next mark," he said.

Tom Griffo, analyst at Cargill Investor Services, targeted gold's next downside target at $340 and $335 an ounce, or about $15 below current levels. ''That's strictly technically speaking," he said, adding that $300 does not even enter the picture at this point.

"I don't even want to talk about $300," he said. "Let's take this move one step at a time. If we do fall as low as $300, I think we will crack it, but that's a long way off."