Relatively high scaling factors, like Tuesday's, mean an auction has beenflooded with lowball orders that signal bearish sentiment. Traders alsofound Tuesday's oversubscription rate of 2.7 times the amount of goldtendered to be lackluster, compared with previous British auctions.

Nearby June gold futures fell $1.50 to $274.70 an ounce on the Comexdivision of the New York Mercantile Exchange. Afterward, analysts said theBritish auction's fundamental effect to supply and demand will be nominal,even though its symbolism helped spark the futures sell-off.

"That amount of gold they auctioned changes hands every 15 or 20 minutes onthe commodity exchanges," said gold fund manager Harry Bingham, of Van EckGlobal.

"But when people decide that these are all-knowing seers who have knowledgeof the world, it becomes important."

Gold prices have actually been declining throughout the spring, plungingthrough $290, then $280, and leaving the once-reachable benchmark of $300 aslittle more than a gleam in traders' eyes. Mr. Bingham and other marketwatchers blamed the strength of the U.S. dollar as a major culprit in thatlonger-term decline. They said that since gold trades in U.S. dollars, it'snow attractive for foreign producers and investors to sell as much goldforward as possible, hoarding dollars instead of their local currencies.

And after the Federal Reserve's latest interest-rate increase, that trenddoesn't seem likely to end anytime soon, said analyst Scott Meyers, ofPioneer Futures Inc. Fed Chairman Alan Greenspan is "trying to fend offinflation, and doing a great job at it. He's also hurting metals," said Mr.Meyers, who estimates that gold began its latest downtrend in earlyOctober.

A recent report by the industry-funded World Gold Council showed a 29% dipin world-wide investor demand for gold in this year's first quarter,although a 7% rise in jewelry consumption kept the metal on pace with lastyear's world-wide demand of 795.2 tons.

Most of the dip in investor interest came from the U.S. following the smoothyear-2000 transition, said WGC analyst George Milling-Stanley.

He said gold coin sales fell sharply this first quarter, compared with the1999 period when consumers seemed to be hoarding them in case a New Year'scomputer glitch hampered their ability to draw money from banks.

Mr. Milling-Stanley said, however, that many of those buyers seem to stillbe holding onto their coins as a long-term investment, even if a new wave ofinvestors hasn't supplanted them to keep this quarter's demand high.

"I think we can get somewhat back to normal now," he said.

In other commodity trading Tuesday: ELECTRICITY: Futures fell, butthat only shaved a little off the gains of the previous two days, which werebuilt on a heat wave in California. Market observers said spiking pricescould be a frequent occurrence this summer because there's a lack ofcapacity to deal with the usual surge in demand arising from airconditioners. Higher electricity prices are also feeding into naturalgas.

The California Independent System Operator, which is responsible formaintaining the state's grid, bought electricity at an average of $133 amegawatt-hour, having made purchases at the maximum allowable $750 for muchof Monday afternoon. By comparison, the wholesale price of power last weekin California averaged about $40/MWh for daytime hour. The 12-month forwardaverage price of electricity futures for delivery to the California-Oregonborder, which are traded on Nymex, have risen to $52/MWh from $28.50/MWh ayear ago.

SOYBEANS: Futures fell at the Chicago Board of Trade on bearishMidwest weather forecasts and on selling related to key chart levels,traders said. The July contract fell 4.25 cents to $5.4875 a bushel.Forecasters called for as much as 1.25 inches of rain over 70% of theMidwest on the coming three-day Memorial Day weekend, traderssaid.

-- The Wall Street Journal