Gold Flips Undervalued: Fund Managers Eye Potential Rally Amid Macro Shifts
Fund managers now deem gold its most undervalued in over three years, according to a recent BofA survey. This sentiment shift historically preceded a near-tripling in gold's price. The signal emerges as broader market cash levels drop, indicating stretched positioning in risk assets.
Fund managers have flipped their stance on gold, now calling it the most undervalued asset since March 2023, per the latest BofA survey. This dramatic shift comes as gold bounces 3.5% from its $3,900-$4,000 support zone. The last time this signal flashed, gold surged significantly, nearly tripled its price.
This contrarian call stands out against a backdrop of declining cash levels across portfolios, triggering a sell signal for broader risk assets. Managers are heavily crowded in trades like semiconductors and AI, while gold remains unloved and uncrowded. This positioning suggests gold could be a natural rotation target if equities face a correction.
Technically, gold's recent bounce from the 0.5 Fibonacci retracement at $3,943 aligns with the sentiment reset. Momentum is quietly improving, with the daily RSI trending higher into neutral territory. However, the long-term structure remains bearish, capped by a descending trendline from its all-time high.
Key resistance lies at the trendline itself, converging near current levels, followed by the $4,300-$4,400 zone. A rejection here could expose the $3,552 golden pocket. Upcoming catalysts include the Fed decision, with markets pricing a 60% chance of a September hike, and geopolitical developments.
Crucially, the BofA survey ran before the recent oil surge and renewed hawkish Fed rhetoric. This timing caveat means managers' initial assessment might already be stale, adding a layer of complexity to gold's immediate trajectory.