Billionaire hedge fund manager John Paulson, one of the world's most influential gold investors, said on Friday that the metal is now at an appropriate price level, following last week's rout that dragged prices to five-year lows.
Paulson, in his first public comments since the recent price crash, said his firm, Paulson & Co. Inc., has retained a 10 million share stake, now worth about $1 billion, in SPDR Gold Trust, which tracks the price of gold.
"I think gold is fairly valued today," Paulson said in an interview, adding that the market was starting to balance.
"As Western demand for gold falls because the fear of inflation is low, demand out of Asia continues to grow for it as a store of value and for use in jewelry," he said.
His outlook on gold suggests prices have little room to recover significantly as the Federal Reserve prepares to hike interest rates, probably as early as later this year, but may reassure nervous investors who have speculated whether Western funds joined the mass selling that saw prices sink 4 percent in a matter of seconds last week.
More than $500 million of gold futures were dumped in last week's sudden selloff.
On Friday, gold was at $1,094.91 an ounce, down 16 percent since the middle of January and off from a record peak of $1,900 hit four years ago.
While Paulson's hedge fund was the single largest investor in the SPDR Gold Trust at the end of the first quarter, the position, now worth about $1.05 billion, is a small portion of the $20 billion Paulson & Co's holdings. It was not among the top three holdings for the firm at the end of the quarter, according to regulatory filings.
The fund had 10.23 million shares in the SPDR Gold Trust as of March 31, and the position has not changed materially since then. Regulatory filings for second-quarter holdings will be released in August.
Paulson called the position small, but said it was a reasonable one to have because it is a hedge against the unforeseen.