Bank of America strategist Michael Hartnett told investors in a Monday note that gold remains his favored hedge against a weakening U.S. dollar, citing fresh fund flows into the metal as evidence of investor demand.
According to BofA's weekly flows data, gold funds drew $6.3 billion in the most recent week, the largest weekly inflow since January 2026. That gold demand came alongside substantial allocations elsewhere: $25.4 billion flowed into cash, $23.8 billion into bonds and $16.1 billion into equities during the same period.
Hartnett framed his view under an "Anything But Dollar" theme, writing that the "trade is long gold...still best hedge against dollar debasement, bond collapse, asset inflation, capitalist populism vs socialist populism politics of 2020s." The strategist portrayed gold as a primary defensive asset in a landscape where the dollar weakens and conventional markets face potential stresses.
Emerging markets and political direction
BofA said the same thematic view - a flight away from the dollar - is supportive for emerging market assets. The bank specifically flagged Brazil's Oct. 4 election as directionally significant, noting that Latin American assets have tended to benefit when more business-friendly governments win office.
The note added a political tally point: all seven presidential elections since January 2025 have been won by right-wing or right-leaning candidates, a detail BofA flagged in relation to market responses in the region.
Wider flow patterns
Beyond gold and cash, investment-grade bonds attracted $10.6 billion in inflows, the largest weekly intake in five weeks. European equities recorded a $1.2 billion inflow, the biggest since February. By contrast, China equities experienced a $14.5 billion outflow, the largest weekly withdrawal since May, and technology-focused funds saw $1.2 billion in redemptions.
BofA's Bull & Bear Indicator eased to 9.3 from 9.7, a move the bank attributed to weaker high-yield flows and outflows from technology and healthcare sectors. Despite the pullback in the indicator, BofA described positioning as "excessively bullish."
Risk note from the bank
The bank cautioned that "'greed' is always more difficult to reverse than 'fear'," and said ending a bull market requires a confluence of excess positioning, excess profit optimism and policy tightening. That caveat underscores BofA's view that prevailing bullish sentiment is an important variable in assessing the durability of current market trends.
Collectively, the flows and the strategist's note sketch a market environment where investors are reallocating across cash, fixed income, equities and gold while watching political developments and market positioning for direction.