Hedge fund manager John Paulson's tough track record in 2012 is spilling over into the gold market because his rivals are going after him, a widely followed industry watcher told CNBC on Friday.
"Everyone knows that Paulson is the biggest owner of gold," Tom O'Brien, editor of The Gold Report, said in a "Squawk Box" interview. "Unfortunately he's down quite a bit. Other sharks are going after him. ... They know he's got to sell."
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Paulson's Gold Fund was down about 24 percent last year. (Read More: One-Time Hedge Fund Wiz Faces Second Abysmal Year)
In his weekly newsletter, O'Brien wrote, "The number of redemptions Paulson gets will affect the [gold] market in the next few months."
Signs of strength in the dollar are also putting gold prices under pressure, and O'Brien told CNBC he expects that to continue.
"We're at $1,660 [on gold prices], we're going to go to $1,550," he said, adding that the market is still in the midst of a two-year consolidation process.
(Read More: Bulls Fret Gold Rally May Be Done)
But when those lows are achieved, prices should really pop, he said. "$2,250, like two or three years from now, might not be a big deal."
Another factor adding to O'Brien's bullish long-term outlook: "Gold has got it's place back in allocations models" among big funds, and he said he thinks that's "not going to leave."
—By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC