(Kitco News) – The chorus of hedge funds warning investors not to chase the gold market continues to grow as the precious metal struggles to find traction after the $2,000 an ounce level has proven to be stronger than expected near-term resistance.
Mark Mobius, founder of Mobius Capital Partners, is the latest fund manager to voice his concern regarding the price action in gold.
In a statement to U.K.-based Financial News, Mobius said that investors should wait for a correction in gold before jumping into the market.
“The safest investments are equities and precious metals such as gold. However, I would not advise buying gold or precious metals at this time until a price correction has taken place,” he said in the article.
Instead of gold, Mobius said that he would be looking at companies “with strong balance sheets and growing earnings.”
Mobius ’ comments come as gold was hit with a wave of selling pressure after Federal Reserve failed to provide any new guidance on interest rate expectations and said that they didn ’t see any benefit to capping bond yields.
Although sentiment has been fairly strong in the gold market, many analysts have said that the market is due for a consolidation phase. At the start of the month, gold futures hit an all-time high of $2,076 an ounce, a gain of more than 36% since the start of the year. Some analysts have said that gold prices could fall back to $1,800 an ounce and still remain in its bullish uptrend.
Mobius isn ’t the only fund manager to raise concerns about the gold market. Tuesday, Bank of America released the results of its August Fund Manager Survey. According to the results, the gold market is the second most crowded asset in financial markets, only behind tech sector stocks.
The report noted that of the total survey participants, 31% said that gold prices were overextended. This is the highest reading since 2011.
Author: Neils Christensen