Are there too many gold and bond bulls? Via Investing.com

Investing.com — The current market landscape is witnessing an increase in bullish sentiment around both and bonds, a shift that begs the question: Are there too many bulls in these assets?

Analysts at Strategas have been at the forefront of supporting a “long” position in gold and bonds throughout the year, a position that has aligned with market trends so far.

However, recent developments suggest that this once contrarian view may now be approaching a saturation point.

“$2,800 was and remains our gold target, with near-term support at the upsloping 50-day moving average (around 2,485),” the analysts said.

However, sentiment around gold has become increasingly bullish as the market sees a growing number of investors flocking to the asset.

Sentiment has moved from being contrarian to mainstream, a signal that usually warrants caution.

They stop short of calling the sentiment overly bullish, but it’s something they suggest keeping in mind for the rest of the year.

Similarly, bond bulls are becoming less of a niche group. At the start of the year, being bullish on bonds was a lonely position.

Now, a crowd is forming. This change reflects broader market movements, particularly following recent interest rate decisions.

The rise in 10- and 30-year Treasury yields since last week’s Federal Open Market Committee meeting illustrates that while yields have risen, they remain in a downtrend, struggling with significant levels of resistance.

Global bond yields, particularly short-term rates such as German 2-year bonds, continue to fall, indicating sustained pressure on yields.

The growing number of bullish investors on both bonds and gold reflects broader market concerns, particularly around persistent inflation and geopolitical uncertainty.

These conditions usually drive the demand for safe haven assets. However, Strategas stresses the importance of monitoring this crowded trade. In the markets, when too many investors take the same side of a trade, it can signal the potential for a reversal or at least a break in the trend.