Bank of America's July Global Fund Manager Survey, which polled 181 institutional managers overseeing $484 billion in assets, found a net 6% of respondents now call gold undervalued, the first negative overvaluation reading in more than three years. That flips dramatically from earlier in 2025, when a net 40% or more of the same cohort labeled the metal overvalued near its January peak.
The last time the survey showed an identical setup was March 2023, when gold was trading below $2,000. What followed was a rally that eventually carried the metal to $5,598 in January of this year. Gold has since pulled back roughly 26% from that record, a drop deep enough to push it into bear market territory earlier this month before a two-day, 3.5% bounce off the $3,900-$4,000 support zone. On Wednesday alone the metal gained 1.74%, closing at $4,148, its highest finish since July 7.
The technical picture adds texture to the sentiment reset. That $3,900-$4,000 zone corresponds to the long-term 0.5 Fibonacci retracement at $3,943. Buyers appeared precisely where the golden ratio suggested they might. The daily RSI has climbed back to 52, recovering into neutral territory, though a descending trendline still caps the recovery from above.
Cash Levels Flash a Warning Elsewhere
What makes the gold signal stand out is the context around it. Average cash allocations across the survey fell from 4.1% to 3.6% of assets. Under BofA's Cash Rule, any reading at or below 4% triggers a contrarian sell signal for risk assets. Positioning elsewhere looks stretched: a record 82% of respondents named long semiconductor stocks the most crowded trade, and 45% flagged an AI bubble as the biggest tail risk. Meanwhile, 83% expect the Federal Reserve to hold rates without a hike before the November midterm elections.
Gold sits at the opposite end of that crowding spectrum. If the cash signal precedes an equity correction, the metal's unloved status could make it a natural rotation target for large allocators. That said, the survey ran from July 2 to 9, before the ceasefire collapse sent oil above $90 and revived hawkish Fed commentary. Managers' average year-end oil forecast of $71 already looks dated. With US-Iran deal odds sliding to 28% and geopolitical pressure building across the Middle East, the macro backdrop that fund managers priced in during the survey window has shifted materially in the days since.
This article is for informational purposes only and does not constitute financial or investment advice.
