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Nevernevergiveup
A Swiss government panel recommended that the country sell about half of its gold reserves and this raised fears of other countries that do the same and inundate the market.

A Swiss government panel recommended X and this X resulted in Y.
or simply panel took x causing Y.

In given sentence, this is improperly used pronoun to refer the recommendation.
This pronoun also results in improper meaning.

In option B. reserves, which, as a result, raised fears of other countries that

Which refers to reserves instead of recommendation.
as a result is wordy and modifies which.

C. reserves, as a result, they feared that other countries would

as a result is wordy and modifies which.
they implies is absurd as it refers to reserves wrongly thereby introducing the meaning error.

D. reserves, with fears raised that other countries would

with construction after comma is improper and wrong modifier
fears raised is in passive voice instead of active voice as indicated in non underlined part of the sentence.

E. reserves, raising fears that other countries o

This sentence solves all the problems.
raising fears is the correct verb-ing modifier correctly modifying previous action(panel recommending sth) and presenting result of the previous action in correct tense, voice and construction.

For E: I think, the verb-ing phrase is modifying the adjoining clause, i.e 'the country sell about half of its gold', the verb-ing phrase is presenting the result of ' country selling the gold'. But how is the subject i.e 'the country' making sense with the phrase ? egmat AjiteshArun , KarishmaB.
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