BofA Survey: Gold Overvalued or Robust Momentum?

BofA Survey: Gold Overvalued or Robust Momentum?

The price of gold has increased significantly this year and reached new all-time highs. However, there is disagreement among experts as to whether the rally will continue or whether the market is already overvalued. According to Bank of America's latest fund manager survey of 224 asset managers with a total of $638 billion in assets under management, 26 percent of respondents believe gold is currently overvalued. This is attributed to the fact that the price of gold remains near its record high despite adverse conditions and the precious metal is heavily overbought.

While some experts point to gold's overvaluation, others see robust momentum supported by fundamental demand. Some analysts argue that speculative positioning in the gold market is muted, with net longs well below 2020 highs. The possibility of interest rate cuts by the Federal Reserve could push bond yields higher, potentially depriving investors holding gold of profits.

Despite potentially rising bond yields and a stronger US dollar, geopolitical uncertainties and growing global debt could continue to support gold prices. Analysts at Bank of America are confident that gold prices could reach an average of $2,500 an ounce by the fourth quarter and possibly even $3,000 an ounce by 2025. Other experts, such as Swiss Asia Capital CIO Jürg Kiener and analysts at Citigroup, also predict gold prices will rise in the coming months and years due to geopolitical tensions and other factors.