The gold market may be stuck around $1,850 an ounce; however, retail investors don’t appear to be giving up on the precious metal just yet.
According to Spectrum Markets, a European-based securitized derivatives trading platform, bullish sentiment in the gold market reached a record high last month among retail investors.
The platform calculated investor sentiment using its Spectrum European Retail Investor Index (SERIX). The index is calculated on a monthly basis by analyzing retail investor trades on the exchange and subtracting the proportion of bearish trades from the proportion of bullish trades.
The data shows that sentiment in the gold market hit 116 last month, “as retail investors took advantage of a lower gold price amid wider macroeconomic uncertainty,” the report said.
“After a period of decline in May that saw the gold price drop below 1,800 USD on the 16th, the gold price started what looked like a new rally in the last few days of the month, supported by both the dollar and euro undergoing a weak phase”, explains Michael Hall, Head of Distribution at Spectrum Markets.
Gold has been in high demand as uncertainty continues to dominate financial markets. Persistently high inflation continues to threaten the global economy. Rising prices have been exasperated by Russia’s ongoing invasion of Ukraine, driving good and energy prices higher.
“Considering the macroeconomic backdrop, it’s no surprise to see investors looking to take advantage of a dip in the gold price to make safe-haven allocations,” Hall said.
Looking at other assets, Spectrum Markets data shows that investors are relatively lukewarm on equity markets. The report said that investor sentiment for the DAX 40 remained bearish at 99. Meanwhile, sentiment regarding the S&P 500 dropped from 103 to a neutral 100 reading and NASDAQ 100 saw a similar decrease, from 103 to 101, remaining bullish.
Spectrum Markets’ analysis fits with other reports and anecdotal evidence. The U.S. mint sold 147,000 ounces of gold last month, its best May sales in 10 years. U.S. gold bullion sales are up more than 400% from the five-year average between 2015 and 2019.
Analysts have said that strong physical gold demand shows growing anxiety among retail investors looking to protect their wealth.