It's a needle from a tool used for yarn for rug-punching. It would have slid up to determine the size of the yarn loops in the rug. Gee, and I thought all those years of being obsessed with yarn spinning were wasted, lol!
Thank you sooooo much Mary - it's been driving me insane trying to figure out what it was. It all makes sense now as my mother used to do a lot of rug making!!!