Gold is the most undervalued asset in the eyes of institutional fund managers since March 2023, according to Bank of America's latest monthly survey. The poll of 181 managers overseeing $484 billion in assets found a net 6% now consider gold undervalued — the highest reading in over two years. The metal has already bounced 3.5% from the $3,900–$4,000 support zone, trading at $4,148 as of the survey period.
Why the Undervaluation Reading Matters
The last time the BofA survey showed a similar net 6% undervaluation for gold was March 2023. Back then, the metal rallied from below $2,000 to a record $5,598. Today, gold sits about 26% below that all-time high, having slipped into bear market territory earlier in July. The survey's contrarian signal is amplified by a sharp drop in cash levels: average cash in portfolios fell from 4.1% to 3.6%, triggering BofA's sell signal (cash below 4% is considered bearish).
Other survey findings paint a cautious picture. A whopping 82% of respondents named long semiconductor stocks the most crowded trade, and 45% called an AI bubble the biggest tail risk. Meanwhile, 83% of managers expect no Federal Reserve rate hike before the November midterm elections.
Technical Picture: Resistance and Support Levels
Gold faces immediate resistance at a descending trendline drawn from the $5,598 peak. The next major barrier sits at $4,300–$4,400, which corresponds to the 0.382 Fibonacci retracement of the entire rally from the 2023 lows. On the downside, key support remains at $3,900–$4,000 (the 0.5 Fib retracement at $3,943) and the 0.618 golden pocket at $3,552. The daily Relative Strength Index has climbed back to 52, neutral territory after dipping below 30 earlier this month.
Near-Term Catalysts: Fed Decision and Geopolitics
The survey was conducted July 2–9, before a ceasefire collapse sent oil above $90 and revived hawkish Fed commentary. Managers' average year-end oil forecast of $71 is now stale. Two near-term events could shift gold's trajectory: the next Fed decision, where markets price roughly 60% odds of a September rate hike, and a proposed 10-day truce between the US and Iran. Any escalation in the Middle East or a surprise Fed move would likely test the $3,900 support — or break it.
