TLDR
- Bank of America strategist Michael Hartnett says gold is the best hedge against dollar weakness
- Gold funds saw $6.3 billion in inflows last week, the biggest since January 2026
- Spot gold rose to around $4,394 per ounce, supported by a weaker dollar
- Fading expectations of a Fed rate hike in September are boosting gold’s appeal
- Shipping disruptions in the Strait of Hormuz are keeping energy inflation risks alive
Gold is trading just under $4,400 an ounce after a strong week, with Wall Street backing the metal as a top trade heading into the second half of 2026.
Bank of America strategist Michael Hartnett told clients on Monday that the “trade is long gold,” calling it the best hedge against dollar weakness, bond market instability, and what he described as the political tensions of the 2020s between capitalist and socialist populism.
Gold funds pulled in $6.3 billion in the latest week, the largest weekly inflow since January 2026. That figure came from BofA’s own flows data, which also showed $25.4 billion going into cash, $23.8 billion into bonds, and $16.1 billion into equities.
Spot gold rose 0.4% to $4,394.31 an ounce on Monday morning. Gold futures gained 0.3% to $4,451.62. The metal ended last week nearly 1% higher.
Dollar Weakness and Fed Rate Expectations
The U.S. dollar index fell 0.3% to 99.40, giving gold an extra lift. A weaker dollar can make bullion cheaper for buyers using other currencies, which tends to increase demand.
Recent U.S. economic data has also reduced pressure on the Federal Reserve to raise rates. Consumer sentiment dropped for the first time in three months, and retail sales posted their biggest monthly decline in more than a year.
Lower interest rate expectations support gold because the metal does not pay interest. When rates are expected to stay flat or fall, the cost of holding gold drops.
The Fed kept rates unchanged at its July meeting. Fed Chair Kevin Warsh gave no clear signal on future policy, saying only that the central bank would not waver in targeting 2% inflation. Three members dissented in favor of a 25-basis-point hike.
Investors are now watching Wednesday’s release of the July Fed meeting minutes for more detail on where policy is headed.
Strait of Hormuz Disruptions Add Inflation Risk
Energy markets remain a wildcard. Shipping traffic through the Strait of Hormuz dropped sharply over the weekend following attacks on three vessels operated by the Abu Dhabi National Oil Company. Only five commodity ships passed through on Saturday, and none on Sunday, compared to 31 the prior weekend.
Analysts at TD Cowen warned that continued oil price risk could limit the rally in gold and copper if inflation rises and forces the Fed to keep rates higher.
BofA’s Bull and Bear Indicator eased to 9.3 from 9.7, with positioning described as “excessively bullish.” The bank also flagged Brazil’s October 4 election as a key event for emerging market direction under its “Anything But Dollar” theme.
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