Billionaire investment guru George Soros has reduced the exposure to gold in his privately-held US hedge fund Soros Fund Management, prompting speculation as to whether he believes that long-term interest rates - and the economy - in the US have touched bottom.

Filings archived in the US Securities and Exchange Commission, which were obtained by ShareCast, show a significant reduction in the billionaire investor's exposure to gold.

As of December 31st, Soros Fund Management had 600,000 shares invested in the SPDR Gold Trust which were valued at $97,206,000. This contrasted to the 1,320,400 shares held in the same trust in the preceeding quarter, which were valued at $227,135,000.

Traditionally, the price of gold has had an inverse relationship with the US dollar -it tends to move in the opposite direction - and a positive correlation with inflation expectations.

If, as some have begun to speculate, the US Federal Reserve moves to taper its asset purchases in the short-to-medium future (as the President of the St.Louis Fed proposed last night) then that could have an upwards impact on market interest rates and, as a result, would likely result in an increase in the value of the US dollar, in turn prompting a reduction in the yellow metal's usefulness as a store of value as the 'opportunity cost' of holding it rises.

The benchmark interest rate in the US has been held at a record low of 0.25% since January 2009 as the country attempts to recover from the severe impacts of the global financial crisis. Nevertheless, over the past six months the country has seen progressively encouraging data with the national rate of unemployment contracting to 7.8% and successive monetary policy decisions seen to be gaining traction.

In January, the Federal Reserve reported that economic activity expanded in all 12 Federal Reserve Districts in the preceeding six weeks.

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