CHAPEL HILL, N.C. (MarketWatch) — Remarkable as gold’s Thursday rally undeniably is, it probably shouldn’t have come as that big a surprise.

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That’s because sentiment’s behavior during gold’s recent correction was a textbook illustration of what happens during declines that are nothing more than mere corrections during ongoing bull markets.

The sentiment hallmark of major market tops, according to contrarian analysis, is a high level of bullishness that advisers stubbornly cling to even in the face of market weakness. As contrarians are fond of saying, bear markets like to descend a slope of hope.

That isn’t what we saw in during gold’s recent correction. Even at the all-time high just shy of $1,400 an ounce hit in mid-October, the average recommended gold market exposure (among gold timers tracked by the Hulbert Financial Digest) was quite low.

In fact, as judged by the Hulbert Gold Newsletter Sentiment Index (or HGNSI), that average exposure never got even half as high as its all-time high.

Further, even from its relatively low mid-October level, the HGNSI dropped quickly in the face of gold’s correction — even though that correction never led to bullion shedding more than 5%.

On all counts, there would appear to be abundant evidence of a robust wall of worry for gold’s bull market to continue climbing.

By Marketwatch - Mark Hulbert

Published November 4th, 11.22 AM