WRAPUP 2-Paulson cut gold bets again as Soros, others rushed back

Mon May 16, 2016 7:46pm EDT
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By Devika Krishna Kumar

May 16 (Reuters) - Gold bull John Paulson slashed his bets on bullion while billionaire investor George Soros and other big funds returned to the metal for the first time in years, filings showed on Monday, as prices staged their biggest rally in nearly 30 years.

New York-based hedge fund Paulson & Co, led by John Paulson, one of the world's most influential gold investors, slashed its investment in SPDR Gold Trust, the world's biggest gold exchanged-traded fund (ETF), by 17 percent to 4.8 million shares, U.S. Securities and Exchange Commission filings showed on Monday.

It was Paulson's third cut to his SPDR stake in a year and saw him drop to the third largest investor in the fund from second, behind BlackRock and First Eagle Investment Management.

"If you were already long, which clearly Paulson was, maybe he's just taking some profits off the table," Mike Dragosits, senior commodities strategist at TD Securities said.

In an interview with Reuters last July, Paulson described prices, which were languishing at five-year lows around $1,100 per ounce at the time, as "fairly valued".

His outlook suggested he believed prices had little room to recover significantly as the Federal Reserve prepared to hike rates, ending an era of low rates and taking the sheen off bullion.

Since the end of the first quarter, prices have extended their rally, hitting fresh one-year highs above $1,300 earlier this month as investors have bet that the pace of interest rate increases may be slower than previously expected amid global economic turmoil.

Volatile equity markets and negative rates in some countries have also boosted demand for a store of wealth.   Continued...