Gold has lost its shine, falling to a one-year low. For contrarians, however, it may be the time to buy.
A record number of fund managers, surveyed by Bank of America Merrill Lynch, said they see gold as undervalued.
In the survey, 17 percent of the fund managers said the precious metal may be too cheap, while more than half of the 178 fund managers said the most crowded trade was in the FAANG stocks, a reference to Facebook, Apple, Amazon, Netflix and Google's parent Alphabet.
The Bank of America strategists said investors trying to take an opposite view of the prevailing market trend should buy gold and sell tech shares. "We cyclically advise contrarian bears to position for 'peak profit, peak policy stimulus' theme via long gold, short US tech," they wrote in a note to clients.
Gold futures for August hit a low of $1,225.90 per troy ounce in Tuesday’s session, the lowest level since last July 14, when it traded as low as $1,214.0. Gold was down nearly 1 percent Tuesday afternoon and was negative for a third session in a row.
Gold is down more than 2 percent in July so far and is on track for a fourth month of losses.