Oz,
I am not sure of the exact reaction. I just picture it like the oxidation of most metals in pyrotechnics. I do know that Harold always did his meltings in a filtered fume hood, to avoid losses of gold.
Harold - "From my experience, I'd say that is a poor idea. Incineration causes dusting, and dusting results in losses. To incinerate without some means of capturing potential losses was not a good idea, and proven in practice by having a filtered hood. Cleaning out the hood on about a two year cycle resulted in a recovery of roughly eight ounces of gold. That does not take into account the amount of gold that was trapped in filters. "
Good Luck,
Nick