BRITAIN WILL be selling more than half of the gold held in the reserves at the Bank of England, the Treasury announced yesterday, in a move that signals the end of an era for the precious metal in the world monetary system.

The proceeds from the UK's sale of 125 tonnes (around 4 million fine troy ounces) of gold - 3 per cent of total reserves - this financial year will be invested instead in interest-bearing dollar, euro and yen assets. Over the next few years the plan is to reduce gold reserves from 715 tonnes to 300 tonnes.

The sales will take place through a series of auctions every other month starting on 6 July. Members of the London Bullion Market Association and other institutions with gold accounts at the Bank of England, will be allowed to enter bids.

The Treasury has left itself some leeway to alter the size and timing of the auctions depending on market conditions. A spokesman said: "We do not intend to try and play the market."

The UK is not the first country to reduce the level of gold in its reserves. Canada sold gold in 1979. More recently Belgium and the Netherlands have sold large amounts, as did Australia and Argentina in 1997.

Last month Switzerland severed the link between the Swiss franc and gold and passed legislation permitting its Central Bank to reduce its holdings by up to 1,300 tonnes. The US, Germany, France and Italy will hold the largest remaining gold reserves.

The UK's reserves are worth nearly $37bn, including the gold, while foreign currency liabilities amount to $22bn. The 715 tonnes of gold are worth about $6.5bn, or roughly half the net reserves