| 13.7°C Dublin

Gold prices slide after mega-rich Soros offloads his large holding

GOLD prices retreated yesterday after mega-rich currency speculator George Soros sold the precious metal.

The multi-billionaire hedge fund manager sold his large holding in gold as the price spiked to $1,550 an ounce.

Mr Soros's liquidation could well mark the peak for gold since other hedge funds and traders who followed him into the gold trade could decide to sell, market traders said.

The Hungarian-American financier is understood to have first started to accumulate gold in 2008 when it was in the $850-$900 an ounce range.

This means he made a return of at least 60pc to 70pc over almost three years.

Soros Fund Management, a $28bn (€18.8bn) firm run by Keith Anderson, bought gold to protect against deflation.

It now believes there is less risk of a sustained drop in consumer prices because the Federal Reserve is still pumping money into the financial system, it was reported in the US.

A spokesman for the company declined to comment.

Gold for June delivery fell $28.90, or almost 2pc, to $1,511.50 an ounce.

It also emerged yesterday that Mexico massively ramped up its gold reserves in the first quarter of this year.

It bought more than $4bn of bullion as emerging economies move away from the ailing US dollar, which has dipped to two-and-a-half-year lows.

The third-biggest one-off purchase of gold by any country over the past decade took Mexico's reserves to 100.15 tonnes -- or 3.22 million ounces -- by the end of March from just 6.84 tonnes at the end of January, according to the International Monetary Fund and Mexico's central bank.

Gold has gained 11pc this year, driven by concern over eurozone debt and the unrest in the Arab world, as well as by the US dollar's 7.6pc decline against a basket of currencies.

Sergio Martin, chief economist for HSBC in Mexico, said the government probably saw gold as a highly liquid asset that would reduce exposure to the falling greenback.

"They're probably thinking that getting out of dollars and into gold makes sense because we know the dollar has some trend to depreciate in the near future at least," said Mr Martin.

"I don't think they're going to lose money with this."

Silver prices were down $3.48 to $39.10, almost wiping out April's gains and off 21pc from recent highs.

A volatile US dollar and news of an official €78bn bailout of Portugal were not enough to buoy gold and silver.

Both metals were trying to find support levels in early trading but momentum selling dragged them lower.

See page 9

Indo Business