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Gold Timers Are Finally Throwing in the Towel
Mark Hulbert says gold traders should be encouraged by this contrarian analysis of sentiment among market timers.
Author:
Take heart, long-suffering gold traders: A sustainable rally is getting close.
I base this forecast on a contrarian analysis of sentiment among several dozen gold market timers. Collectively, they are now more pessimistic than at almost any other time over the past two decades. In effect, these timers have constructed an incredibly high and strong Wall of Worry that a gold market rally could climb.
The construction of this wall has been going on for some time, of course. Gold bullion has dropped nearly $400 an ounce since its high last August. Shares of gold mining companies have dropped even more in percentage terms: The VanEck Vectors Gold Miners ETF GDX has dropped 29% since August.
Gold’s decline is an opportunity for contrarian investors MarketWatch 2/6/2021
MARKETWATCH PREMIUM
This week’s steep losses for gold have prompted many once-bullish gold market timers to throw in the towel. That means contrarians should be on the lookout for a low-risk trading opportunity.
It’s been two months since I last devoted a column to gold market sentiment. At that time, the average gold timer’s exposure to the gold market was in the middle of the historical range, and I interpreted that to mean that “the outlook for gold prices over the next several weeks is neutral.” Until earlier this week, gold bullion was trading almost exactly where it was then.