False hope
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02 January 2017
Posted in
Special research
For the first time since the US election, the sentix Sentiment for the precious metal gold turns positive. The rapid built up of positive attitude, however, is counterproductive for further price increases.
As selling pressure eases up, the price for the precious metal gold recovers– at least moderately. Hence, investors sentiment brightens significantly in comparison to mid of December. Lately, only 18% of survey participants indicate that they are “bearish” (pessimistic) towards the yellow metal. A fortnight earlier in December roughly 41% of participants expressed their bearish sentiment. Usually a favourable indication. However, during the same time the share of “bullish” (optimistic) market participants has nearly doubled from 14% to 28%.
Technically, strong sentiment surges limit the upside potential of markets. Based on our statistics investors can expect a merely 1.5% increase over the next four to 16 weeks, on average. We currently do net yet reckon with a durable turnaround. Investors still show only comparably low levels of conviction in gold. Also, based on positioning data provided by the CFTC, investors’ portfolio rebalancing still lags investors’ market view.
Hence, we expect that it is going to take some time until market participants witness a new gold bull market.
