By Mark Hulbert, MarketWatch

ANNANDALE, Va. (MarketWatch) -- Have enough gold timers turned bearish in recent weeks to turn contrarians bullish?

Let's take a look.

In late May, when I last wrote about gold market sentiment, bullishness among gold timers was at a three-month high. And, as I reported then, this meant that contrarian analysis was forecasting lower gold prices. ( Read my May 26 column.)

Today, in contrast, gold timers on average are more bearish than they've been since late April. That, in turn, means contrarian analysis is more upbeat on gold's near-term prospects.

Contrarian analysis, for those of you who find this logic to be counter-intuitive, is based on the historical tendency for there to be too much optimism at tops and too much pessimism at bottoms. It is the basis for the oft-used phrases about bull markets liking to climb a wall of worry, and bear markets preferring to descend a slope of hope.

Objectively measuring market sentiment isn't always easy, however. As readers of this column know, I find it helpful to focus on investment newsletters because, whatever else you might say about newsletter editors, they are incredibly sensitive to which way the winds are blowing. And my econometric studies have shown that their consensus forecast is inversely related (in a statistically significant way) to the gold market's subsequent direction -- just as contrarian analysis would predict.

Consider our Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among the shortest-term gold timing newsletters tracked by the Hulbert Financial Digest. It currently stands at 10.2%.

That's a big drop from where it was in late May and early June, when the HGNSI got as high as 56.8%.

That big a drop is encouraging, according to contrarian analysts, because it suggests an eagerness among market timers to run for the exits and even jumping onto the bearish bandwagon.

An additional historical comparison reinforces this conclusion: The last time that the HGNSI was as low as it is now, gold bullion was trading below $900 per ounce, well below its current price. In other words, gold timers are as discouraged today by gold in the low $930s as they were a couple of months ago when bullion was some $40 cheaper.

This suggests that the gold timers, on balance, are increasingly inclined to see the glass as half-empty. In the process, they are reconstructing the wall of worry that markets like to rise.

Of course, the following caveats should go without saying, but I'll repeat them anyway: Sentiment is not the only factor that makes the markets go 'round. So even though contrarian analysis historically has been more right than wrong in its predictions, it can provide no guarantee.

Furthermore, contrarian analysis is only a short-term market timing tool. In my econometric studies, in fact, its greatest explanatory power is over the short term -- a matter of weeks, not years. So, for example, contrarian analysis tells us nothing about where gold will be trading a year from now.

But, if history is a guide, chances are good that gold will be trading higher over the next month or two.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.