CHART: Gold price risk index is flashing red

Frankfurt-based sentix, a leader in the field of behavioural finance, has been compiling sentiment indices since 2001 by surveying more than 4,500 institutional and private investors.

In a blog post published today, sentix analyst Patrick Hussy says the research firm’s overall risk index for gold is flashing red and registering a “clearly tense risk constellation” (eine deutlich angespannte Risikokonstellation in the original, which sounds even more severe).

“The overall risk index for gold amounts to -1.13 standard deviations (inverted representation in the chart) and points to risks of setbacks.

“In almost all sub-indices of the sentix risk radar for the gold price, “conspicuous” values are recorded.

“The sentiment is overexcited, the technical oscillators all overbought. The positioning has also picked up recently and investors are now noticeably “long”.

The sentix experts caution gold bulls to wait for a period of consolidation before getting back into the market, but emphasizes that they are not calling an end to the rally in the gold price and “the strategic bias continues to be tightly upward.”

After the more than $100 rally over three weeks in June, gold has traded in a narrow band between $1,420 and $1,440 an ounce, which seems to suggest gold bulls have been able to curb their enthusiasm and haven’t succumbed to irrational exuberance.