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There's a 'controversy' brewing in gold market: Goldman Sachs

Gold has been one of the best investments this year, rising 15 percent even as the S&P 500 is only a few percentage points better than flat. But as gold has slipped over the past month due to heightened expectations of a summer rate hike, indicators "show controversy" around gold ETFs, according to Goldman's options research team.

Looking to the two popular ETFs that track gold miner stocks, GDX and GDXJ, the Goldman Sachs team notes a few mixed signals.

First of all, even as gold has dropped, "shares outstanding for GDX and GDXJ have risen by 11 percent in the past month," indicating that more money is flowing into the space. Indeed, precious metals ETFs saw their fourth straight week of inflows in the week ended May 25, according to Thomson Reuters.

Another indicator of bullish sentiment comes from the options market, where investors appear to have "increased upside exposure" to GDX and GDXJ, based on a comparison between how puts and calls are trading.

On the other side of the coin, the ranks of those betting against the ETF appears to have risen, based on "an unusually high level of short interest."

All in all, "Positioning in gold equity ETFs doesn't show a clear bullish or bearish picture, but shows the sector is currently controversial," Goldman's Katherine Fogertey, John Marshall and Vishal Vivek determined.

Read MoreThe volatile gold play that's nearly doubled this year

What makes this even more interesting is that this bullish picture in the options market and bearish picture when it comes to short interest are at odds with the team's insights about the ETF market in general — namely that options generally show a great deal of hedging even as short interest has slid.

Mark Tepper, the president of Strategic Wealth Partners, sees merit on both sides of the gold coin.

"Tactically, gold is certainly overbought — it has come quite a long way so far this year, and all this hawkishness coming out of the Fed recently gives it the perfect excuse for a pullback," Tepper said Wednesday on CNBC's "Trading Nation."

"However, we do like gold cyclically," due to the possibility that easy-money policies around the world cause inflation, as well as his perception that a rate hike could actually lead the U.S. dollar to drop and yields to rise due to "credit stress," Tepper added.

When it comes to the charts, Strategas Research Partners technical analyst Chris Verrone said he "would look to use this current weakness as a buyable opportunity," given his perception that there is support at $1,200 per troy ounce, which is only a bit below where gold settled Wednesday.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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