A store assistant handles gold chains hanging from a wall display (Photographer: Dario Pignatelli/Bloomberg)

Ray Dalio, Paulson Keep Faith in Gold Amid Rate Hike Headwind

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(Bloomberg) -- Billionaire hedge-fund managers John Paulson and Ray Dalio kept their faith in gold even as rising interest rates trim the metal’s gains.

As of March 31, New York-based Paulson & Co. had 4.32 million shares in SPDR Gold Shares, the biggest exchange-traded product backed by bullion, according to a regulatory filing. That compares with 4.36 million shares at the end of December. Billionaire Ray Dalio’s hedge fund Bridgewater Associates also maintained its stake in SPDR and iShares Gold Trust, the second largest bullion-backed ETF.

Gold advanced 1.7 percent in the first three months of 2018 as the dollar weakened a fifth straight quarter, helping the precious metal withstand the headwind from rising U.S. borrowing costs. SPDR Gold saw net inflows of $396 million in that period, boosting holdings in all bullion-backed ETFs tracked by Bloomberg to the highest since 2013. At 8:39 a.m. in New York, spot gold was down 0.2 percent to $1,287.43 an ounce.

In March, Paulson’s gold and special situations hedge funds were said to be returning client capital as the firm narrows its focus after assets shrank to $9 billion, from $38 billion in 2011, according to people familiar with the matter.

Filings released this month do not include hedge funds’ current position, which may have changed since the end of the quarter. Paulson uses the SPDR ETF to back his funds’ gold share classes, which offer holdings denominated in bullion for investors interested in decoupling their assets from the value of the dollar.

Money managers who oversee more than $100 million in the U.S. must file a Form 13F within 45 days of each quarter’s end to list those stocks as well as options and convertible bonds. The filings don’t show non-U.S. securities, holdings that aren’t publicly traded, or cash.

©2018 Bloomberg L.P.

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