The London gold was fixed at $263.85 a troy ounce, down on Wednesday afternoon's $267.05 and marking a fresh low since May 24, 1979.

In real terms, using constant 1998 prices, gold prices were more like 26 or 27-year lows according to data in a recent report by Gold Fields Mineral Services which put the average London afternoon fix at $357 in 1973 and $227 in 1972.

"The speed at which gold has come down has left many potential buyers sidelined as they take the correct attitude of `why buy today when tomorrow it could be cheaper?,'" said one Swiss dealer, who added that volumes were not great.

"The lack of follow through so far in London trading suggests potential for a profit-taking-induced spike higher," said a London dealer who suggested selling rallies.

Theories differed on the cause ofAsian trade's third consecutive fall this week, with some talking of producer sales while others blamed funds and even short-selling consumers.

Another London dealer said sentiment would struggle ahead of Britain's first gold auction next month.

"We saw selling yesterday from people who should have been buying, that is to say consumers, which is amazing. The market will probably rally once we get the first auction out of the way although a month is a long time," he added.

Britain is due to auction 25 tonnes of gold on July 6, the first step in a process intended to cut UK reserves from 715 tonnes to 300 tonnes during the next few years.

Prices have dropped more than $25.00 from near $290.00 a troy an ounce since Britain announced its intentions.

Spot gold was last at $263.75/$264.25, down from Wednesday's US close of $265.20/$265.60 and just above overnight lows.

Spot silver was quiet at $4.95/$4.97, just below Wednesday's close, while platinum was unchanged at $362.00/$364.00.

Palladium was$2.00 lower at $340.00/$345.00.