Gold fell to the lowest point in almost half a year as investors exchanged the metal for more liquid dollars. Spot gold in London fell to $1,523 a troy ounce, the weakest since July and down almost $400 from a nominal record reached this year. The reversal has spooked investors searching for havens, FT reported. The largest gold exchange-traded fund, held by individual investors and the biggest hedge funds alike, has unloaded 44 tons, or three percent of its hoard, this month. The latest fall came as the year ends and some traders, including banks, sought to raise cash. They turned to dollars, which Thursday rose to a 15-month high against the euro. “When you have an environment of a stronger dollar and people looking for the most liquid thing they can put money into, that pressures gold,” said Hayden Atkins, senior analyst at Macquarie in London. Gold has nevertheless climbed almost eight percent in 2011, marking an 11th straight year of gains and outperforming most other commodities and stock indices. But a series of jarring drops since peaking at $1,920 per ounce in early September undermined a key selling point: that it is a haven, not a risk asset. John Paulson, the hedge fund manager, sold more than a third of his fund’s holdings in the SPDR Gold Shares exchange-traded fund in the third quarter, equivalent to about 34 tons. His firm was still the largest single owner of the shares as of September. Gold’s champions see it as a hedge against inflation and the devaluation of paper currencies. Worries about inflation have abated somewhat after grain and oil prices pulled back late this year and growth stalled in developed economies. “Gold has two unique characteristics which are tied together,” said Douglas Hepworth, director of research at Gresham Investment Management in New York, which allocates more than $1bn of its $13bn commodities portfolio to gold. “It is a unique hedge against the debasement of all fiat currencies. That makes it a unique hedge against stagflation. However in a period where you’re not having stagflation but stagnation, it’s not a hedge at all. It will do badly.” In spite of near-zero interest rates and concerns about the long-term impacts of monetary easing in the US, the dollar has held firm in the face of more dire conditions in Europe. “Gold definitely works in certain environments. We are obviously not in one of those at the moment,” Mr Atkins added.