AS gold prices near US$2,000 an ounce, some bulls say it’s time to take money off the table after the safe-haven rally extended too far too fast in recent weeks.

Gold investors at several firms said gold prices could correct sharply, citing overvaluation. While that does not mean prominent bulls are now bears, they recommended investors take profit on gold holdings, after the precious metal traded briefly above US$1,900 Tuesday for the first time.

Spot gold rebounded more than 1 percent to above US$1,853 an ounce yesterday after sliding more than 3 percent in the previous session in its biggest daily fall in a year and a half.

Investors in droves have sought a refuge in bullion from a stock market meltdown, fears about sovereign debts in Europe and the United States and worries about a recession.

Gold has gained nearly 9 percent in just the last six sessions before Tuesday’s fall and by more than US$400 since July.

Independent investor Dennis Gartman, who has long been bullish on gold priced in non-U.S. currencies, said he was reducing his long positions on gold priced in euro and sterling terms.

“Perhaps things have become a bit too frothy and reduced rather than increased exposure seems reasonable and wise,” Gartman said.

Gartman said gold’s rally was not sustainable after SPDR Gold Trust’s total assets surpassed that of the SPDR S&P 500 ETF, making GLD the largest exchange-traded fund in the world for the first time. “Such senseless things happen after periods of euphoric rises in prices of some markets,” Gartman said.

A resurgence in investment demand has fueled gold’s rally in the past decade, particularly during periods of global economic slowdown, growing from 4 percent of total demand in 2000 to more than 39 percent in 2010, according to estimates from Citigroup.

“However, we caution that this very aspect that provided support for gold over this time may result in its downfall going forward,” the bank said in a note.

“Even a slowdown, let alone a decline, in net investment flows can have a materially negative impact on the gold price from current levels.”

Still, yesterday’s bounce showed gold’s appeal is far from fading as buyers picked up the precious metal after its sharp decline Tuesday.

“It’s premature to call it a correction. But there is quite a bit of downside risk if gold breaks below US$1,800 on a sustained basis. It may go lower to US$1,700 or so,” said Ong Yi Ling, an analyst at Phillip Futures. (SD-Agencies)