Bullion is heading for a 12th straight annual gain, after temporarily giving up its gains for the year last month. The metal rose almost sixfold since the end of 2000, beating the 24 percent advance in the S&P 500, with dividends reinvested, and the 90 percent return on Treasuries. The Dollar Index fell 25 percent.

While gold's four-month drop from February is the longest since the start of the bull market, it's not the biggest. Futures fell 21 percent in a month in 2006 and 30 percent over eight months in 2008, before rallying to end higher for the year. The 2,375.8 metric tons held in ETPs exceeds official reserves in all but four nations tracked by the International Monetary Fund, and the amount is within 1.5 percent of the record 2,410.2 tons reached in March.

'Last Resort'

"Gold remains the currency of last resort," said Jeff Currie, the New York-based head of commodity research at Goldman, which predicts $1,840 by the end of the year. "The case for higher gold prices remains intact."

Greek voters return to the polls on June 17 after elections on May 6 failed to produce a government. Syriza, a party proposing to cancel the terms of an international bailout and restore pensions and wages, was propelled into second place, increasing prospects that the 17-nation euro would fracture. Those concerns were partially allayed last week after Irish voters backed the EU's fiscal treaty.

Central banks, the world's biggest owners of gold, have added to their reserves for 14 consecutive months through March, the longest streak since 1964, IMF data show. Investor demand for gold coins is accelerating, with sales of American Eagles more than doubling to 53,000 ounces last month, according to figures on the U.S. Mint's website. The 10 most widely held options confer the right to buy bullion at prices from $1,800 to $2,500 between July and March 2013, Comex data show.

'Asset Bubble'

Soros Fund Management LLC, founded by the 81-year-old billionaire, more than tripled its investment in the SPDR Gold Trust in the first quarter to 319,550 shares now valued at $50.2 million, an SEC filing May 15 showed. It held as few as 42,800 shares last year and as many as 6.2 million at the end of 2009. Soros called gold the "ultimate asset bubble" in January 2010. Michael Vachon, a spokesman for Soros, didn't respond to a voicemail for comment.

Paulson & Co., founded by the 56-year-old investor who became a billionaire in 2007 by wagering against the subprime mortgage market, still holds 17.3 million shares in the SPDR Gold Trust, now valued at $2.72 billion, an SEC filing on May 15 showed. Paulson is seeking to reverse record losses last year caused by an ill-timed bet on an economic recovery. Armel Leslie, a spokesman for Paulson, declined to comment.

Winning Streak

The decline in prices accelerated a contraction in the size of the gold market. Open interest, or contracts outstanding, fell to 423,433 on June 4, from as much as 650,764 in November 2010, Comex data show. An average of 17.9 million ounces was cleared through London in April, the least since October 2010, according to the London Bullion Market Association.

Prices slumped as investors sought safety in the dollar, the world's most-used currency, and bonds. The Dollar Index has appreciated for five consecutive weeks, the longest winning streak since January 2009. Yields on 10-year Treasuries, 10-year U.K. gilts and 10-year German bunds declined to records last month, data compiled by Bloomberg show.

"People are moving to the dollar because of liquidity," said Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.7 billion of assets. "Gold has had extended periods in this bull run where it has backed up and given up some of those gains," he said, predicting $2,000 in the first quarter of next year.

Central Bank

Gold rallied last year in anticipation of the Federal Reserve announcing a third round of debt buying. The metal rose about 70 percent as the Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing ending in June 2011. The central bank has since held off on prospects for accelerating growth in this and the next two quarters, the median of as many as 69 economist estimates compiled by Bloomberg show.