Hedge fund manager and long-time gold bull John Paulson slashed his bullion holdings by a third in the third quarter, data showed, dampening sentiment in the gold market on Tuesday.

Paulson & Co. cut its holding in the SPDR Gold Trust to 20.3 million shares from 31.5 million at the end of the second quarter, a U.S. regulatory filing showed late on Monday.

The sale is equivalent to about 1.1 million ounces of gold worth about $1.94 billion, based on current prices.

Paulson held on to his large bullion investments earlier in the year after billionaire financier George Soros liquidated almost his entire $800 million sake in gold in the first quarter. His holdings have been closely watched since then.

Soros had called gold the ultimate bubble, dumping it before the metal ran up to a record peak of $1,920.30 per ounce on Sept. 6 and then tumbled to a low of $1,534.49 on Sept. 26.

The filing to the U.S. regulators will likely grab headlines and draw out the bullion bears, pointing to this as another sign that gold has had its day, ANZ Research said in a note.

Spot gold slipped 1 percent to $1,762.98 per ounce by 0930 GMT, although it is still up about 25 percent this year.

The reason behind Paulson's liquidation of gold was unclear. ANZ said he might be transferring positions from SPDR, an exchange-traded fund, to physical holdings to cut management fees charged by the SPDR.

We doubt Paulson's gold fever has run its course, the note said.

The liquidations could also be linked to redemptions. Paulson's Advantage Plus fund lost nearly half of its value by the end of September after sharp falls in some of its equity holdings such as Bank of America and Hewlett Packard .

Paulson, who uses the SPDR gold holdings to hedge currency risk for investors, said earlier this month redemption requests totalled about 8 percent of the fund's total value, estimated around $30 billion.