Investor Sentiment Shifts on Gold: Insights from BofA’s Survey

In May, Bank of America’s global fund managers survey highlighted a significant shift in investor sentiment towards gold as an asset. A record 45% of investors now view gold as “overvalued,” a steep increase from 34% in April, when gold prices were reaching all-time highs.

Expert Insights on Gold Valuation

This rising skepticism among investors aligns closely with the outlook from Bank of America’s commodities expert, Francisco Blanch. Speaking on Bloomberg Television, Blanch emphasized the excessive positioning of gold in investment portfolios, stating, “Gold was the most overly positioned asset across the spectrum.” As a result, he believes that many investors currently have long positions on gold.

Peak Prices and Market Demand

Blanch suggests that investors may have already witnessed a peak in gold prices for the time being. In 2025, gold stands out as one of the top-performing assets, having gained over 22% this year fueled by strong demand for gold-related funds and high central bank purchases. The precious metal even surpassed the historic milestone of $3,500 per ounce last month.

Challenges to Sustaining High Prices

For gold to maintain its price above $3,500 an ounce, Blanch argues that both consistent investment and central bank demand are crucial. He pointed out that the current demand growth is around 5% year-on-year, but to sustain high prices, growth needs to exceed 10%. Notably, jewelry demand has decreased by approximately 20% year-to-date, raising concerns about the broader market conditions for gold.

Future Catalysts for Price Recovery

According to BofA’s strategist, the downward trend in gold prices is likely to continue in the short term unless significant geopolitical events unfold. “I’m not necessarily bearish long term; we still see value in gold down the line,” Blanch noted, positioning a lower price target of $3,500 for the time being.

The Role of Geopolitical Uncertainty

In discussing potential triggers for a resurgence in gold prices, Blanch stated, “You need to see another massive layer of geopolitical uncertainty.” Factors such as the recent China trade agreement and ongoing tensions between Russia and Ukraine could influence the market dramatically. A collapse of the global trade system or renewed sanctions on Russia could serve as catalysts for rising gold prices.

Conclusion: Monitoring Gold’s Future

The insights from Bank of America’s survey underscore a pivotal moment in the gold market, as investor sentiment shifts and market conditions fluctuate. While the long-term outlook for gold may still hold promise, short-term challenges and the need for external catalysts remain critical in determining its future trajectory.