According to Bank insiders, the 400 tons of gold were sold during a slump in the market, with prices sinking to their lowest in 20 years.
The Sunday Times says several Asian countries benefited from the sell-off, with China alone making a profit of £1 billion as gold prices trebled in the last five years.
A statement from the Bank released last night in response to the claims said: "In regard to the gold sales, the Bank acted solely as agent and the decisions were taken by [the] Treasury."
The Treasury meanwhile insisted that the Bank of England had "recommended auction as the best method to achieve the programme's objectives of transparency, fairness and value for money".
Today's article compares the chancellor's decision to that of the Conservative party's Black Wednesday, when John Major's government oversaw an economic collapse after attempting to keep the pound artificially high against the dollar.
George Osborne, the shadow chancellor, has seized upon the mistake following the damage done to the chancellor over recent pension fund deficit accusations.
"First it was discovered that Gordon Brown ignored advice on pensions; now it is revealed that he ignored advice on gold sales and the taxpayer has lost millions," he claimed.
"The chancellor is in danger of getting a reputation as someone who has very poor economic judgment."
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