BofA Strategist Touts Gold as Top Hedge Amid Surging Inflows

Bank of America strategist Michael Hartnett is advising investors that the "trade is long gold," citing the metal's role as a premier hedge against a weakening U.S. dollar amid the largest inflows into gold funds since January. The recommendation came in a note to clients on Monday as part of a broader "Anything But Dollar" investment theme.

Surging Inflows and 'Anything But Dollar' Theme

According to Bank of America's weekly flow data, gold funds attracted $6.3 billion in the latest week, the most significant inflow recorded since January 2026. This move into the precious metal reflects growing investor appetite for assets that can protect against currency depreciation.

Hartnett wrote that gold is the "still best hedge against dollar debasement, bond collapse, asset inflation, [and] capitalist populism vs socialist populism politics of 2020s." The strategist's "Anything But Dollar" thesis also suggests a positive outlook for emerging market assets, according to the note.

Broader Market Flows Signal Shifting Sentiment

The move into gold occurred alongside significant inflows into other asset classes, painting a complex picture of market sentiment. Other key flows for the week included:

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• Cash: $25.4 billion inflow
• Bonds: $23.8 billion inflow
• Equities: $16.1 billion inflow

Notably, investment-grade bonds drew $10.6 billion, their largest inflow in five weeks, while European equities took in $1.2 billion, the most since February. Conversely, investors pulled $14.5 billion from China equities, the biggest outflow since May, and technology funds saw withdrawals of $1.2 billion.

Bullish Positioning Warrants Caution

Despite some defensive positioning, Bank of America's Bull & Bear Indicator remains in "excessively bullish" territory, though it eased slightly to 9.3 from 9.7. The dip was attributed to weaker flows into high-yield bonds and outflows from the technology and healthcare sectors.

Hartnett cautioned that "'greed' is always more difficult to reverse than 'fear'." The bank noted that ending a bull market typically requires a combination of excessive positioning, overly optimistic profit expectations, and monetary policy tightening.