Today's Bank of England auction of gold seemed almost a non-event. Mostly because gold lately has traded in a low-volume doldrums, a victim of the recent strength of the U.S. dollar and the weakness in some gold-producer's currencies, notably the Australian and Canadian dollars.

The 25-tonne lot sold today was over-subscribed by a factor of 2.6 times, which was a better showing than the past July auction, which brought bids for only 1.2 times the 25 tonnes being offered. In contrast, during the late 1999 run-up in gold prices, these British gold auctions at one point saw eight times the bidding strength come to the sale as there was gold available.

But that was in a more active and upbeat gold market. This time, with gold prices slipping to a ten-month low on scant volume recently, the mood was more sober. In fact, gold bears expressed mock concern that there might not be enough bidding interest for the entire 25 tonnes, and can you imagine the dire consequences if not enough buyers showed up to take on the whole load?

By now, that kind of rhetorical jockeying ahead of these scheduled auctions has come to be the norm. You can't blame a trader for stirring up such talk, if only in an attempt to scalp a little action out of what has been, lately, a very dull gold market.

The auction saw bids for over sixty tonnes (2,103,600 ounces, in fact) of gold come to the table. The $270.60 price at which the gold sold was below both that morning and that afternoon's London fix by $1.00 - $1.50 U.S.

Demand came from the West in the form of pre-Christmas seasonal buying. Eastern demand is also coming into its season. As soon as India's yearly monsoons just ended can be assessed for their impact on farmers' incomes, Indian jewelry makers will be able to gauge their gold needs, which are dependent on the success of the crops in rural areas.

Gold producers were reportedly absent from this auction, for the most part. Reuters News quoted one New York bullion dealer who seemed to aptly sum up the whole auction this time around:

"It didn’t do diddly-squat."