Gold Overvaluation Hits Record High in May 2025, 45% of Investors Concerned

On May 12, 2025, Bank of America released a survey indicating that gold overvaluation reached a record high in May. This revelation comes as a significant development in the precious metals market, highlighting the growing disparity between gold's perceived value and its actual market price. The survey underscores the increasing speculative interest in gold, driven by various economic and geopolitical factors.

The overvaluation of gold suggests that investors are increasingly viewing the metal as a safe haven asset amidst global uncertainties. This trend is likely fueled by concerns over inflation, geopolitical tensions, and the potential for economic instability. The record high overvaluation indicates that market participants are willing to pay a premium for gold, reflecting their heightened risk aversion and desire for asset protection.

According to the survey, 45% of investors believe gold is overvalued, an increase from 34% in April. This shift in sentiment underscores the growing concern among investors about the current economic environment and their desire to protect their assets. The survey highlights that the demand for gold as a store of value remains robust, particularly in regions with volatile currencies and uncertain economic outlooks. This sustained demand contributes to the overvaluation, as investors continue to allocate significant portions of their portfolios to gold.

The survey also points to the role of central bank policies in influencing gold prices. The expectation of continued low-interest rates and quantitative easing measures by major central banks has further bolstered gold's appeal. These policies reduce the opportunity cost of holding non-yielding assets like gold, making it an attractive option for investors seeking to preserve capital.

However, the record high overvaluation of gold raises questions about the sustainability of current price levels. Some analysts warn that the premium investors are paying for gold could be unsustainable in the long run, especially if economic conditions improve or if central banks tighten monetary policies. In such scenarios, gold prices could correct, leading to potential losses for investors who have overpaid for the metal.

The survey's findings also have implications for other precious metals and commodities. The overvaluation of gold may lead to a reallocation of investment flows towards other safe-haven assets, such as silver or platinum. Additionally, the survey highlights the need for investors to diversify their portfolios to mitigate the risks associated with overvalued assets.

In conclusion, the Bank of America survey revealing the record high overvaluation of gold in May 2025 provides valuable insights into the current state of the precious metals market. The overvaluation reflects investors' growing risk aversion and demand for safe-haven assets amidst global uncertainties. However, it also raises questions about the sustainability of current price levels and the potential for future corrections. Investors should carefully consider these factors when making investment decisions in the precious metals market.