When John Paulson’s hedge fund bought almost 100 tonnes of gold in early 2009, the public support from one of the world’s most respected hedge fund managers was a boon for the bullion market.

Now Mr Paulson’s enormous investment seems more like a curse.

It is little secret that Paulson & Co is struggling. Its main fund, Advantage Plus, lost about half its value over the course of 2011.

That creates a problem for gold investors, due to the very public nature of the fund’s gold investment – a large part of which is held through the SPDR Gold Trust exchange traded fund, holdings in which funds must report on a quarterly basis.

Knowing that Paulson & Co holds more gold than many central banks, and that it is struggling, it only takes a short leap of imagination to worry that he might be forced to sell it. Indeed, in the third quarter of last year, Paulson & Co sold ETF shares equivalent to roughly 34 tonnes of gold – and in September the gold price fell 11 per cent.

Mr Paulson has therefore become symbolic of the “dash for cash” trade that has weighed on gold. There is no doubt that fears of forced liquidation – with Paulson & Co at the top of the list – was a cause of uncertainty in December and many investors are still nervy.

Paulson & Co is not the only holder of gold whose financial problems are weighing on the market. The central banks of Greece, Spain, Portugal and Italy between them hold 3,200 tonnes of gold, and even though most market observers and officials dismiss the possibility of outright sales, there is no doubt that, as with Paulson & Co, they are a cause of concern.

Such woes matter to the gold market as analysts go through the annual rigmarole of forecasting the year ahead.

Anyone glancing at the forecasts being published by bullion banks and trading houses would think now is the time to buy gold: despite the recent price drop, the consensus remains unanimously bullish.

The London Bullion Market Association’s annual survey of 26 analysts and traders, for example, showed that all but three expected gold to average higher than the current spot price of about $1,615 a troy ounce over the course of 2012. The large majority expects a peak above $2,000.

Nonetheless, it may not yet be time to jump back into the gold market with both feet. Despite their general optimism, the analysts on average expect gold to fall as low as $1,443 an ounce – down 10.9 per cent from current prices – and most I have spoken to believe that will happen in the first few months of the year.

Investors will not know until mid-February whether Paulson & Co sold gold in the fourth quarter of 2011. But that is almost insignificant. The pall over the gold market may not lift until it and other large holders of bullion decisively put their woes behind them.