"The IMF sale has been overhanging the market for a long while. This news has been factored in," a bullion trader said. Britain this week will call for the International Monetary Fund (IMF) to sell 10 million ounces of gold from its reserves, a British treasury official said.

"The British finance minister Gordon Brown will call for a doubling of the current proposal for five million ounces," the official said. Spot gold opened lower compared to New York's previous close but recovered and was quoted at $283.00/50 at 0430 GMT. The market activity in Asia was slower on Monday because of a public holiday in Australia. When European and New York markets open some dealer selling may be seen on technical factors, with the price possibly dipping to $280, a trader said.

"The price may go lower because we have been trying on the upside for some time, but $285 seems to show strong resistance," he said.

The Group of Seven leading industrial nations were likely to consider proposals to give debt relief to poor nations at IMF meetings this week in Washington.

Besides IMF gold sales, Switzerland's central bank is expected to begin selling some its gold reserves beginning next year. Traders said there was talk of Canadian gold sales but no confirmation.

The effect has been to put a cap on the gold price, a trader said. "Any up tick in the price will attract selling," the trader said, adding he sees gold ranging between $270 and $290.

"Gold has lost its treasury function altogether in this new era. I think more central banks are moving to sell gold, but I don't think any will be buying," the trader said.

Another trader said a bigger market factor was the speculators' large short position in the market. "We are in very oversold territory."

He said that while a sharp drop in the gold price was unlikely, the bearish news regarding IMF and other possible gold sales was limiting potential rises in gold.

"The gold price will be capped in a trading range between $278 and $287 for at least the next couple of weeks," he said.

As for physical demand for gold, one Hong Kong trader said," I am not seeing much because there is not much demand out of China. People are still waiting for prices to go lower."