Gold fell to a 20-year low yesterday after the Bank of England (BOE) sold 25 tonnes into the market in a the first of a controversial series of auctions set to last more than two years.
Despite the heavy demand for the gold offered, analysts said yesterday's collapse in the price was due to fears that the BOE's action would be copied by other global central banks.
By the afternoon fix in London, gold had fallen to US$257.60 per ounce, its lowest since May 1979.
Yesterday, the BOE said it had successfully placed all its gold on offer into the market.
The BOE said the gold was sold at $261.20, well in line with the morning fix of $261.30 yesterday.
Negative sentiment has surrounded the sale ever since it was announced by the British Government in May, but the BOE reported yesterday that the auction had attracted bids equal to some 5.2 times the amount on offer.
The auction is to be the first of several aimed at more than halving the Bank of England's holdings of gold, from 715 tonnes to 300 tonnes.
