A short term warning for gold bugs

Sentiment models are flashing caution for gold again. The Commitment of Traders data chart below shows the large speculator (hedge fund) net position in gold bullion, readings are moving into the crowded long zone despite the recent weakness in the gold price. This is a contrarian bearish reading.

Similar sentiment concerns were also raised by Mark Hulbert, who stated that gold timers were becoming more bullish on the yellow metal despite its decline. Other sentiment surveys also show the same rising bullishness.

Medium and longer term, I generally concur with the views of the Aden sisters who wrote in late April (italics are mine):

Gold's C rise is finally over. After rising 55% in nine months, in one of the best intermediate rises in the current seven year bull market, it signaled several things. Most important is the strength behind the bull market because new highs continued to be reached. Gold's next step is likely to be a good downward correction that could take several months to develop.

They concluded with:

Some worry that the March peak was THE peak for gold. This is very unlikely considering the world situation and the economic imbalances today.