Prominent hedge fund manager John Paulson continued to hold significant gold investments in the fourth quarter of 2012, even as other investors pulled out.

Notable institutional investors, including George Soros, Julian Robertson and Allianz's Pimco reduced their bets on gold during the quarter, when bullion posted its biggest quarterly loss in more than four years.

Paulson & Co owned 21.8 million shares in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, at the end of December, unchanged from Sept. 30, a filing with the U.S. Securities & Exchange Commission showed on Thursday.

"That's a good sign as he's a big player. It shows that he still has long-term faith in the market," said Bill O'Neill, a partner in commodities investment firm LOGIC Advisors.

Paulson is by far the biggest shareholder of the SPDR gold ETF. He has often advocated gold to offset risks related to currency exposure and U.S. dollar depreciation.

The value of Paulson's SPDR ETF holdings, however, dropped to $3.54 billion in the fourth quarter from $3.75 billion in the third, resulting in a paper loss of $215.5 million for his fund.

The decline was because of a 5 percent, or $100, drop in the price of spot gold during the fourth quarter.

Some analysts cited year-end hedge fund redemption for gold's pullback in the quarter.

In December, Morgan Stanley Smith Barney recommended that its financial advisers pull client money out of a Paulson fund. Earlier in the year, Citigroup's private bank decided to withdraw $410 million from Paulson & Co.

Besides the gold ETF, Paulson's firm also held onto significant stakes in the shares of major gold mining companies, including Barrick Gold Corp., AngloGold Ashanti Ltd. and about half a dozen others. He also had a stake in Freeport-McMoran Copper & Gold Inc.

Some other well-known managers were more bearish.

George Soros, who called gold "the ultimate bubble" in 2011, reduced his position in SPDR Gold by more than a half to 600,000 shares in the fourth from 1.32 million in the third quarter.

Tiger Management's Julian Robertson dissolved his entire stake in Market Vectors Gold Miners ETF, while he held onto the Junior Gold Miners ETF.

Recent signs of recovery in the U.S. housing and jobs markets also diminished gold's appeal as a hedge against economic uncertainty, analysts said.

"If the equities market continue to roll higher here, investors could divert more money away from gold in the near term," O'Neill said.

Year to date, gold is down around 2.5 percent. It traded at $1,635 an ounce on Thursday, just $10 above a six-month low.

SPDR Gold Trust is the world's largest gold-backed, exchange-traded fund, holding around 1,323 tonnes of gold bullion. It is also among the world's top ETFs in terms of market capitalization.