Investors should short gold, one of the best performing assets this year, Goldman Sachs said, as it believes a recent rally triggered by concerns over the health of the global economy has been overdone.
Bullion has gained about 13 percent in 2016 as worries over negative interest rates and their impact on the banking sector sent investors scurrying out of equities and into safe-haven gold.
Concerns over the Chinese economy and fears of a U.S. recession also helped gold post one of its biggest rallies in years. Prices hit a one-year high of $1,260.60 an ounce last week.
But Goldman Sachs said prices will roll back.
“Fears around China, oil and negative interest rates have likely been overstated in the gold price and other financial markets,” Goldman Sachs said in a note dated Monday.
“We are recommending shorting gold through a GSCI-style rolling index,” it said, referring to the S&P GSCI commodity index.
Goldman expects prices to fall to $1,100 in three months and $1,000 in 12 months.
Gold has already given back some of its gains, falling below $1,200 early on Tuesday as equities rebounded.