For the first time since August 2009, gold is cheap

Finally, gold is cheap.

In its latest fund manager survey, Bank of America Merrill Lynch noted that on a valuation basis, gold was viewed as "undervalued" by fund managers for the first time since August 2009.
By BAML's measure, the precious metal is 1% undervalued.
Of course, it's been a long road down for gold, which is now almost 40% lower than its all-time high hit back in 2011.

In a note to clients on Monday, Rick Bensignor, chief market strategist at R.F. Lafferty, said that $1,150 - with a small margin either way - is a big price level for gold.

At $1,159, gold hits a 61.8% Fibonacci retracement from its all-time high, a key technical support level.

Bensignor adds that at around current prices, almost every buyer since 2009 is holding a losing position, and in his view, it's either time for a further drop or a bounce higher: the current price won't be sustained.

On Tuesday morning, gold prices were unchanged at around $1,155 an ounce. And by at least one measure, people think gold is a buy.

BAML gold chart


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