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Gold plunged to a 12 1/2 -year low Friday after a Swiss government panel recommended selling half the country's reserves, the fifth-largest in the world.

By day's end, gold for delivery in December had tumbled 4.9 percent, or by $16.10, to close at $308.60 a troy ounce on the New York Mercantile Exchange, the lowest level since March 1985.

On the Commodities Exchange, the spot gold price tumbled $15.70 to $307.30.

"The fact the Swiss are talking about selling at all will encourage other people, central banks and investors, to try and get out of the door first," said Jeffrey Ralph, a trader at Royal Bank in Toronto. Investors "are running for the exits," he said.

The Comex estimated a record 130,000 gold futures traded Friday, more than three times the 1997 daily average. The record final volume is 127,439 contracts, set on Nov. 28, 1995.

The Swiss National Bank could sell 1,400 tons of gold for a $5 billion fund to aid victims of the Holocaust and disasters, a panel of experts recommended to the Swiss government.

Some of the recipients of the funds would be Holocaust victims, but the bulk of it would go to other people suffering from poverty, war and disaster in Switzerland and elsewhere, a provision that might make voters more likely to approve it. It remained to be determined how much of the fund would go to Holocaust victims.

Since any change would involve an amendment to the constitution, the issue would have to go to a national referendum, probably in early 1999. Prior to that, the bank and the Finance Ministry must agree on a plan and present it to Parliament, which isn't expected to vote on it until next year.

The Swiss report was another blow for gold, which sank in July after Australia said it sold two-thirds of its reserves. The Swiss panel recommended the sale because the nation no longer needs to back its currency with gold.

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