Demand soared at yesterday's U.S. Treasury gold auction as bids were received for almost double the amount sold.

This was in sharp contrast to last month's auction when demand was relatively small.

Yesterday's auction was the first of an unspecified number of sales of at least 1.5 million ounces, more than five times the amount the Treasury was selling each month earlier in the year. The sale is part of President Carter's dollar rescue plan.

The average price yesterday was $214.17 compared with $199.05 at last month's auction.

As usual, European banks led the bidding. Sixteen successful bids were made, at prices ranging, from $212 to $217.50 an ounce. The average was $214.17.

Gross proceeds from the sale were $321.2 million, of which $63.3 million will be used to retire gold certificates. The remainder will go into the Treasury and be used in part to reduce the U.S. balance of payments deficit which reached $3.8 billion during the third quarter.

The next auction will be held Jan. 16.

The price of gold rose in the two largest bullion markets, meanwhile, closing in London at $216.375 a Troy ounce, up $3.375 from Monday's close of $213, and ending the day in Zurich $214.75, up $1.625 from Monday's close of $213.125.

The price of gold had shot up to $220.35 at the morning fix in London.

Gold usually benefits when the dollar declines, and the U.S. currency slid further on foreign exchanges yesterday in a continuing reaction to plans for a larger-than-expected increase in oil prices next year by the Organization of Petroleum Exporting Countries.