In a letter to Snow, 12 senators from mainly US mining states said sales of the IMF's 103 million ounces of gold reserves, the world's third-largest, would hurt gold producers and cause job losses, including in impoverished countries.

Finance chiefs of the rich Group of Seven nations asked IMF Managing Director Rodrigo Rato last weekend to report by April on proposals for using IMF gold reserves to write off debts owed by the fund's poorest borrowers. The senators' letter was dated January 31, some days before the meeting.

News of the G7 request sent gold prices down to October 2004 lows on Monday as the market tried to guess what the IMF may say. Gold ended European trade at $417.15 on Thursday.

The United States holds the world's largest bullion stockpile.

The US executive board member to the IMF is barred from voting on the sales of IMF gold reserves unless the US Congress has approved the move. But the US Treasury is likely to march in lockstep with the senators' arguments.

"We do not believe it is necessary to sell IMF gold to achieve debt relief for the poorest countries. We will review the IMF report on proposals to fund debt relief when it is released," Treasury spokesman Rob Nichols said.

The letter is signed by senators from the gold-rich states of Nevada, Colorado, Montana, South Dakota, Idaho, Utah, Alaska, New Mexico, California and Washington.

"We believe that careful consideration must be given to any proposal that could have such adverse effects on this important commodity market, and the businesses and communities in the US and around the world that are affected by it," the senators wrote.

The senators noted it was the second time in five years that "serious proposals have surfaced that would effectively raid a core reserve asset of the IMF.

In 1999, a proposal to sell IMF gold to help indebted countries was opposed by Congress, but lawmakers authorised a less disruptive off-market revaluation of a portion of the reserves.