Many investors bought gold through exchange-traded funds (ETFs) on the way up for the precious metal, and now many are selling through ETFs on the way down.

For the first two months of the year, gold ETFs unloaded 140 metric tons of gold, or about 5 percent of their holdings, the Financial Times reports. Gold ETFs suffered a record monthly outflow of gold in February.

Not surprisingly, gold fell 5.6 percent during those two month. Spot gold stood at $1,581 late Wednesday, down 18 percent from the record high of $1,921 in September 2011.

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Investors have been content to opt for stocks and other riskier assets in recent months rather than gold. And some view the ETF trend as indicative for the gold market as a whole.

In the past, the thinking has always been that gold ETF positions represented a fixed allocation to the metal taken by individual and institutional investors and that these positions would buoy gold in troubled times. But now that thinking is changing.

“The latest collapse in gold ETF holdings stands in sharp contrast to our assumption that ETF positions were likely driven by longer-term allocation rather than short-term trading,” Damien Courvalin, a Goldman Sachs analyst, writes in a report obtained by the Times.

A continued shedding of gold by ETFs would “precipitate and accelerate” a drop in gold prices, he maintains.

The rise of U.S. stocks to record highs also could push gold down further, experts say.

"You are going to get less people interested in defensive plays like the precious metals,” Phillip Streible, senior commodities broker at futures brokerage RJ O'Brien, tells Reuters. “People are more into buying equities in a risk-on type environment."

However, not everyone thinks investors’ attitude toward the metal has changed.

“There are still very strong core holders of gold ETPs [exchange-traded products] as a hedge against currency debasement and potentially unexpected inflation. Those guys are still there and they’re holding on,” Nicholas Brooks, head of research at ETF Securities, tells the Times.

James Steel, precious metals strategist at HSBC, agrees. “In my conversations with hedge funds, I don’t sense that anybody thinks we’ve entered a bear market. I do think that many of the medium- and short-term traders think that right now gold is not doing very well and a few other things are quite tempting.”

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