Is gold overbought or underinvested? Why BofA metals research chief says entry points are coming; what you need to know – The Times of India

Gold remains a key portfolio asset despite recent surges, and investors may still find opportunities to buy on dips, according to Michael Widmer, head of metals research at Bank of America.“Gold is overbought at the moment, but it is still underinvested,” Widmer told Bloomberg Television. “ETF inflows last month were up 880% year-over-year, and that is ultimately a concern. From a pure fundamental macro backdrop, we’re still looking good. The entry points are coming.”Widmer explained that while gold has rallied sharply in recent months, its allocation in portfolios remains well below historical highs. “The highest we’ve ever had in terms of gold allocation is about 1.1%. Right now we are at half a percent. There is still space to increase,” he said, highlighting the potential for selective investment.He cautioned, however, that rapid inflows into gold ETFs cannot continue indefinitely. “You can’t compound growth at 880% forever. At some stage, you run into an air pocket, and gold might not rally. But fundamentally, it remains strong,” Widmer added.On identifying buying opportunities, he said investors should watch for short-term dips. “Monthly or weekly price movements of $100–$200 could present entry points. Volatility is picking up, so the opportunities are coming,” he noted.Widmer also stressed that gold is not purely a speculative asset but plays a strategic role in diversified portfolios. “It has a theoretical underpinning related to fiat currencies and debt. While it doesn’t perform directly in the real economy, it provides price exposure and portfolio diversification,” he said.He noted that institutional holdings of gold typically range from 10–15% of total assets, depending on the risk-return profile. “For the best portfolios, gold serves as a meaningful diversification tool, offering protection and exposure in times of market uncertainty,” Widmer said.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India.)