• Gold remains the best hedge against dollar weakness, bond losses, and asset inflation, says BofA's Michael Hartnett.
  • Gold funds saw $6.3B inflows last week, the largest since January 2026.
  • BofA's Bull & Bear Indicator at 9.3 signals 'excessively bullish' positioning, with tech funds seeing outflows.

Bank of America strategist Michael Hartnett is doubling down on gold, calling it the premier hedge against a trifecta of macro risks: a weakening dollar, bond losses, and asset inflation. His comments come as gold funds attracted a whopping $6.3 billion in the latest week—the biggest inflow since January 2026—according to BofA's flow data.

Hartnett's stance is part of a broader 'Anything But Dollar' strategy, which also favors emerging markets as the greenback faces headwinds from fiscal concerns and potential Fed easing. "The trade is long gold," Hartnett wrote in a note, emphasizing that investors are seeking protection from currency debasement and volatile fixed-income markets.

The surge in gold inflows underscores a persistent risk-off sentiment, even as equities hover near record highs. But BofA cautions that the crowd is already heavily positioned, with its proprietary Bull & Bear Indicator sitting at an elevated 9.3—just shy of the 'extreme bullish' threshold. That's a red flag, the bank warns, as it suggests limited room for further upside without a catalyst.

Notably, technology funds recorded outflows last week, indicating a rotation away from the high-flying sector. That shift, coupled with the gold rush, hints at a market that's increasingly defensive despite its bullish exterior. "Investor positioning is excessively bullish," Hartnett said, "which could leave markets vulnerable if sentiment sours."

The report arrives amid renewed concerns about the dollar's status as the world's reserve currency, with some policymakers and investors questioning its long-term stability. Hartnett's call aligns with a growing chorus of voices advocating for gold and other hard assets as portfolio ballast.

While the inflows suggest conviction, BofA's cautionary note serves as a reminder that crowded trades can unwind quickly. For now, the bank advises clients to hold gold as a hedge, but to remain wary of the froth building elsewhere.