Gold bullish bets increase for three consecutive weeks, Bank of America survey says gold is undervalued, $5,000 comes into market view
Huitong Finance, August 25—— Speculators have increased bullish bets on gold for the third consecutive week, partly due to renewed concerns about the sustainability of U.S. debt reigniting enthusiasm for devaluation trades. CFTC data shows that as of the week ending August 18, gold net long positions rose to 141,648 contracts, the highest since late September last year, representing an 18% increase over three weeks. According to Bank of America's August survey, 16% of fund managers believe gold is undervalued (only 6% in July), marking the most undervalued level since March 2023. If dovish signals emerge at this week's Jackson Hole Symposium, it could be a positive for gold.
Speculative investors have increased bullish bets on gold for three consecutive weeks, in part due to growing uncertainty about the sustainability of U.S. Treasury debt, which has reignited enthusiasm for devaluation trades. However, despite speculative bullish positions rising to their highest level so far this year, overall market sentiment remains below that of twelve months ago and has clearly retreated compared to the beginning of the year.
Three Consecutive Weeks of Rising Net Longs, Reaching a 9-Month High
The U.S. Commodity Futures Trading Commission (CFTC) report for the week ending August 18 shows that managed funds increased total speculative long positions in Comex gold futures by 5,961 contracts to 154,595 contracts; short positions grew by 1,975 contracts to 12,947 contracts over the same period. Net long positions in gold reached 141,648 contracts, the highest since late September last year. Over the past three weeks, net longs in gold have risen by 18% cumulatively, marking the longest streak of accumulation since June.
It is worth noting that speculative momentum is still below the 12-month high, which was 165,519 net long contracts. The recent peak in speculative gold positions occurred in early January 2025, when net longs hit 215,000 contracts.
Bank of America Survey: Gold Is the Most Undervalued Asset
According to Bank of America’s August global fund manager survey, gold still has further upside potential as overall market sentiment remains rather subdued. The survey released last week pointed out that gold appears to be at its most undervalued since March 2023. The survey shows that 16% of fund managers believe gold is undervalued, up from just 6% in July.
Candace Browning Platt, Head of Global Research at Bank of America, stated in a report on Sunday (August 23): "Our commodities strategy team’s models indicate that current investor buying aligns more closely with a $4,000 per ounce gold price. To reach $5,000, investor buying will have to accelerate further. Central banks have already made their contribution—June’s buying was well above the 12-month average. If a dovish signal is sent at the Jackson Hole Symposium this week, it would be favorable for gold."
Further Upside Potential, $5,000 in Sight
Although the gold market has rebounded significantly from July’s lows, some analysts point out that, with the $5,000 threshold now coming into view, there is still ample potential ahead. While sentiment has clearly turned bullish, precious metals still face headwinds: rising oil prices are fueling inflation concerns and may force the Federal Reserve to raise rates before the end of the year.
TD Securities' Head of Commodity Strategy Bart Melek said: "As the Fed has not yet clearly signaled willingness to combat higher inflation, concerns about a weakening U.S. dollar should provide solid support for gold in the coming weeks. However, with crude oil prices continuing to rise, possibly pushing up short-term rates, it is still too early to assert that gold will soar to our target of $5,350 per ounce."
Conclusion
With speculative funds increasing their positions for three consecutive weeks, Bank of America surveys showing gold as undervalued, and ongoing central bank purchases providing support, bullish sentiment in the gold market is clearly on the rise, and the $5,000 mark has started to enter the market's view. However, inflation concerns driven by oil prices and the risk of Fed rate hikes remain key variables capping gold's upside.
The policy signals from the Jackson Hole Symposium this week may serve as a critical turning point in determining whether gold can sustain its current rally.
Eastern Time Zone (GMT+8) August 25, 14:22, spot gold quoted at $4,645.22 per ounce
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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