Gold Bounces Back as Managers Consider It Undervalued

After six months of brutal correction, gold seems to be making a strong comeback. According to data, the yellow metal is indeed finding a floor around $4,200 per ounce. Some analysts even anticipate a rebound towards $4,400. For them, this is not just a simple technical evolution; it is also accompanied by a turnaround in sentiment among institutional investors. According to the latest survey from Bank of America, fund managers now consider the precious metal undervalued for the first time in over three years. Is this a lasting trend or just an adjustment before the next cycle? Let's analyze.

In brief

• Fund managers consider gold undervalued for the first time since March 2023.
• The yellow metal rebounds by 3.5% after defending the support level of $3,900 to $4,000.
• Breaking through the $4,300-$4,400 range will determine the continuation of gold's rebound.

The tide is turning in the gold market

Every month, Bank of America's financial analysis division publishes the Global Fund Manager Survey. Closely followed by institutional investors, this survey relies on responses from 180 to 210 managers representing nearly $500 billion in assets under management.

The June 2026 edition was conducted from June 5 to June 11 among 198 panelists managing $540 billion in assets. It shows that the net percentage of managers considering gold overvalued has fallen to its lowest level since February 2024.

In January, 45% deemed it overvalued, a record since 2012! However, this turnaround is not trivial. It means that institutional investors, who had treated gold as a speculative bubble, now accept it as a reasonably valued asset. This perception is accompanied by a strong macro conviction: 58% of managers identified stagflation as their base scenario over the next 12 months.

In mid-July, BofA published a new survey conducted from July 2 to July 9. This time, it gathered the opinions of 210 managers overseeing $555 billion. The verdict is quite different:

• Growth expectations are at their highest since February 2026;
• Inflation fears have dropped (only 4% net anticipate a price increase vs. 45% in June);
• Equity allocations have increased.

Two underlying trends explain this apparent divergence

The first is the time lag. Indeed, the June survey captured sentiment at the height of the correction when gold was flirting with $4,200. The July survey highlights the rise in equity markets at the expense of defensive assets.

The second factor (and the most underestimated): the cash level of funds. It has fallen to 3.6% in July, its lowest since February 2026.

In this context, Bank of America relies on a well-known empirical rule: when cash falls below 4%, it is a sell signal for equities. Historical data since 2002 shows that such a signal is generally followed by a 1% decline in equities over two weeks. Conversely, Treasuries gain the advantage.

Analysis: Gold is not bouncing back despite optimism, but because it has become excessive.

Gold rebounds despite persistent institutional appetite for equities

According to the survey results published by BofA, the average cash level held by managers drops from 4.1% to 3.6% of portfolios. According to Bank of America's Cash Rule, any level below or equal to 4% triggers a contrary sell signal in the markets.

The other results of the survey illustrate this offensive positioning:

• 82% of respondents consider long positions on semiconductor-related stocks to be the most crowded trade in the market;
• 45% identify an artificial intelligence bubble as the primary extreme risk;
• 83% do not anticipate any rate hikes from the Fed before the upcoming midterm elections in November.

Gold thus appears as one of the few assets still overlooked by major investors. If a correction in the equity markets materializes, some capital could shift towards the precious metal.

However, Bank of America reminds us that its survey took place from July 2 to July 9, before several geopolitical developments. This notably refers to the failure of the ceasefire between the United States and Iran. This has pushed oil above $90 a barrel and revived expectations for a more restrictive monetary policy.

The Technical Rebound of Gold Remains to Be Confirmed

The change in sentiment is accompanied by an initial encouraging signal on the chart. In two sessions, gold has indeed risen by about 3.5% after defending the support zone between $3,900 and $4,000. In the last analyzed session, the metal gained another 1.74% to close at $4,148. This is its highest level since July 7.

This zone corresponds to the 50% Fibonacci retracement, located at $3,943. Technical analysts often refer to it as the golden ratio. Indicators also show a gradual improvement in momentum. For example, the relative strength index (RSI) has risen to 52, returning to a neutral zone after several weeks of weakness.

Upstream, the gold price continues to operate below the downward trend line drawn from the historical peak of $5,598. The first major resistance is located between $4,300 and $4,400, with a Fibonacci level at $4,334. This equates to about 4% to 6% above current prices.

A rejection below this resistance could bring the metal back towards the $3,552 zone. This corresponds to the 61.8% Fibonacci retracement, representing a potential decline of about 14%.

In any case, managers have decided: gold has not been this cheap in three years. The question remains whether the market will follow! The Fed's decision and the outcome of the Iran-U.S. truce will likely provide an initial answer as early as next week. Stay tuned for updates...