Gold Most Undervalued In 3 Years, Fund Managers Say. Is The Bottom In?

What Happened

Fund managers now see gold (XAU) as the most undervalued asset since March 2023, according to Bank of America’s July survey. The reading arrives as the metal bounces 3.5% in two days from the $3,900-$4,000 support zone.

Fund Managers Flip on Gold for the First Time Since March 2023

The July edition of the BofA Global Fund Manager Survey polled 181 institutional managers overseeing $484 billion in assets. A net 6% of them now call gold undervalued, the first negative overvaluation reading in more than three years.

Market Context

Sentiment has reset after a brutal repricing. Gold trades about 26% below its record, a drawdown that already pushed the metal into bear market territory earlier this month.

The market data account Barchart highlighted the signal on X, noting that gold is now the most undervalued in more than three years. In March 2023, an identical setup preceded a rally that nearly tripled the price.

XAU Bounces From $3,900 Support, but the Trendline Caps the Recovery

However, the long-term structure remains bearish. The price still trades below the descending trendline drawn from the $5,598 all-time high, which now converges near current levels.

The first barrier is the trendline itself. Beyond it, the $4,300-$4,400 resistance zone coincides with the 0.382 Fibonacci retracement at $4,334, roughly 4% to 6% above the current price.

Rejection at the trendline would expose the 0.618 golden pocket at $3,552, about 14% below the current price. Next week’s Fed decision, with markets pricing roughly 60% odds of a September hike, and the proposed 10-day US-Iran truce stand as the nearest catalysts.

Why It Matters

The last time the survey flipped this way, gold traded below $2,000 and then rallied to $5,598 in January. Whether history repeats may depend on the Federal Reserve and a possible US-Iran truce.

Cash Levels Trigger a Sell Signal Everywhere Except Gold

The valuation call stands out because managers are anything but cautious elsewhere. Average cash levels dropped from 4.1% to 3.6% of assets, as first reported by analizy.pl. Any reading at or below 4% triggers the contrarian sell signal under BofA’s Cash Rule.

Positioning looks stretched across risk assets. A record 82% of respondents named long semiconductor stocks the most crowded trade, while 45% called an AI bubble the biggest tail risk. Meanwhile, 83% expect no Fed hike before the November midterm elections.

Gold sits at the opposite extreme, unloved and uncrowded. If the cash signal precedes an equity correction, only the major asset managers that consider cheap could become the natural rotation targets.

One caveat matters. The survey ran from July 2 to 9, before the ceasefire collapse sent oil above $90 and revived the hawkish Fed chorus. Managers’ average year-end oil forecast of $71 already looks stale.

That green zone corresponds to the long-term 0.5 Fibonacci retracement at $3,943. Buyers stepped in exactly where the golden ratio suggested they should, echoing levels flagged in a previous gold outlook.

Details

The shift is dramatic. Through 2025 and early 2026, the same survey showed extreme readings, with a net 40% or more of managers calling gold overvalued near the January peak.

The daily chart shows the sentiment reset coinciding with a technical reaction. Gold gained 1.74% on Wednesday to $4,148, its highest close since July 7, after defending the $3,900-$4,000 support zone.

Momentum is quietly improving. The daily RSI is trending higher to 52, back in the neutral zone after weeks of suppressed readings. A similar recovery recently powered a breakout in silver.

Fund managers have marked gold as cheap. Now the chart must decide whether they are early or simply wrong.

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