Technical analysts trying to guess gold’s next move are closely monitoring bullion holdings and flows in gold exchange traded funds as key sentiment indicators.

Holdings in bullion-backed gold ETFs hit an all-time high of about 2,361 metric tons on Dec. 14, but fell for a fifth straight day on Wednesday to the lowest level since Nov. 17, Bloomberg reported Thursday.

“Declines in ETF holdings may affect the price in the short-term,” Colin Hamilton, an analyst at Macquarie Group, told Bloomberg.

It’s difficult to pin down just how much the introduction of ETFs backed by gold and other precious metals in recent years has fueled the dramatic rally. However, there is no doubt ETFs have made it much easier to buy gold and attracted new entrants to the market.

The ETF shares are backed by bullion held in vaults, and remove the need to transport, store and insure precious metals.

Inflows to gold ETFs have fallen by more than 50% this year and may not recover in 2012 as investors look to other asset classes, Reuters reported Thursday.

SPDR Gold Shares (NYSEArca: GLD), the largest gold ETF, is on track for a net annual outflow of 413,000 ounces, according to the story.

The $65.5 billion ETF currently holds nearly 40.8 million ounces of gold. The fund is trying to get back above its 200-day moving average, a closely-followed technical indicator.

“Investor interest seems to be maturing, so you’re not seeing such strong flows into the physically backed ETF,” said Barclays Capital analyst Suki Cooper in the report.