"Gold prices are at a 20-year low following the Bank of England offloading 500 tonnes of the yellow metal. The entire gold fund business has changed since. So, we decided to put it aside," Subramanyam told PTI in an interview.

There was no certainty that other central banks might not offload gold in the near future, though unit sales price at present was lower than output costs globally, the UTI chairman said when asked about the future of the millennium fund.

Subramanyam said the Reserve Bank was looking into the whole gamut of gold fund business and guidelines for it might be in place over the next few months.

The apex bank was also looking at providing assaying facilities and shipping gold to offshore centres, he said and added that UTI would revert to the millennium fund proposal when the situation in gold business turns for the better.

Subramaniam had indicated in December that UTI would launch the fund by March this year following finance minister Yashwant Sinha's announcement of the same in his maiden budget speech. The company had planned to mop up about $US 500 million from overseas markets in the last financial year itself after finance minister Yashwant Sinha announced it in his budget speech in august 1998. The Fund, targeted mainly at Gulf residents, was to be taken up as soon as government approvals relating to exchange risks were received.

UTI officials had exuded optimism that the problems faced by its flagship US-64 due to redemption pressures late last year would not come in the way of the proposed Gold Fund.

The UTI chief had said that informal talks with investors about the proposed fund had indicated that the appetite for it would be good, especially in the light of the Resurgent India Bonds garnering over four billion dollars.

He had also indicated that the company would target the developed markets if time permitted, saying North America could prove a good focus area. At present, gold prices have touched a record low of below US$ 255 per ounce, while the estimated production costs are in the region of US$ 260 per ounce, analysts here said adding that several gold mines were curtailing mining activity in the wake of dull markets.