London gold fixed at $261.30 a troy ounce in the morning, down on Monday afternoon's $263.10, sounding an unofficial bell to the start of bidding.

Spot gold jumped nearly $1.50 after the London fix before settling around $262 as the closed bidding process ended at 11.30 a.m. (1030 GMT). The result was due some 40 minutes later. "This is developing into a real poker game. Nobody is showing their hands," said one London analyst.

Gold prices have dropped $30 an ounce to two-decade lows since the UK announced its sales plan in May, sparking protests by miners and major producers like South Africa.

South African President Thabo Mbeki at the weekend slammed Britain's decision to sell a large part of its bullion reserves, saying its negative impact on gold prices threatened the country'sembattled mines.

The World Gold Council producer group, representing miners from major producing countries, has also campaigned aggressively against the sales.