* Long-time gold bull cuts SPDR holdings by 1.1 mln oz * May be shifting holdings from ETF into physical holdings * Liquidation could also be linked to fund redemptions By Eric Onstad LONDON, Nov 15 (Reuters) - Hedge fund manager and long-time gold bull John Paulson's move to slash ETF bullion holdings by a third does not appear to be a sign that he is abandoning his upbeat view of the metal, industry sources and analysts said. 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. That's equivalent to about 1.1 million ounces of gold worth about $1.94 billion based on current prices. The move is likely a combination of two unrelated factors: end-of-year client redemptions equalling about 8 percent of his total holdings; and a desire to reduce his exposure to the regulated U.S. ETF in favor of less visible swaps, forwards or physical holdings that are not reported in quarterly 13-F filings, a person familiar with his thinking said. Paulson has long been the biggest holder of SPDR shares, using them to hedge currency exposure, while other managers like David Einhorn and Daniel Loeb have favored more-discrete investments in physical bullion. Gold is the biggest holding in Einhorn's $8 billion Greenlight Capital, he said last week. But bullion markets had buzzed during the quarter with talk that Paulson may have been liquidating his holdings as other investments soured. Gold prices tumbled sharply from a record in September, partly on speculation of hedge fund sales that might signal a peak in bullion's decade-long rally. But unlike George Soros, who liquidated almost his entire $800 million stake in gold in the first quarter, Paulson has retained a sizeable share. "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. "(But) we doubt Paulson's gold fever has run its course." 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. Spot gold was last trading down 0.2 percent on the day at $1,777.85 an ounce by 1602 GMT, having earlier dropped by as much as 1.1 percent. The metal is on track for a 25 percent gain so far this year. Gold functioned as a safe-haven asset earlier in the year as investors bought the metal to guard against global uncertainty including the European debt crisis, but lost some of its lustre following the sharp losses in September and has since been moving largely in tandem with other risky assets. OTHER SPDR HOLDINGS UP Paulson has not explained why he decided to sell some of his bullion stake, but analysts said he might be transferring positions from SPDR to other holdings to better shield his positions or cut management fees charged by the SPDR. "Redemptions from ETFs don't always mean the outright liquidation of gold positions: in the past some investors have chosen to move to less-transparent ETFs or other types of gold exposure," UBS analyst Edel Tully said in a note. Paulson's sales in the SPDR, by far the largest exchange-traded fund backed by gold, have been more than offset by purchases by other investors. Overall holdings in the SPDR Trust have risen by nearly 3 percent so far in the fourth quarter, following a 2 percent rise in the third quarter. And some investors saw Paulson's reduction as a net positive for the market, as more tactical hedge fund holdings were replaced with longer-term institutional investors. "Paulson reducing his positions is long-run healthy for gold. It lessens the likelihood of further liquidation pressure from the fund, and it puts the market in a much healthier framework," said Bill O'Neill, partner of commodity investment firm LOGIC Advisors. Paulson's gold liquidation could also be linked to fund redemptions, analysts said. 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 , Hewlett Packard and Sino-Forest . Paulson said earlier this month redemption requests totalled about 8 percent of the firm's total assets, estimated at $30 billion. Paulson offers his investors a gold fund plus the chance to invest in what he calls a gold share class in his other funds. Over the year, investors in Paulson's dollar share classes have suffered deeper losses than investors on the gold share classes, which have helped mitigate some of the pain of the equity losses.