Largest inflows to gold since June '09 - BAML

Added 26th February 2016

A "gold rush" of $5.8bn, the largest three week inflow to gold since 2009, has coincided with the Federal Reserve "talking-down" the US dollar and rising investor fears of a recession and quantitative easing failure, according to Bank of America Merrill Lynch’s research team.

Largest inflows to gold since June '09 - BAML

BAML also noted big precious metals inflows generally of $2.6bn.

Meanwhile, the bank saw the largest inflows to high yield in 16 weeks and a risk-on shift in fixed income corroborated by the first outflows from treasuries in eight weeks.

Furthermore, there were signs of the bull market unwinding, with outflows from healthcare/biotech in 12 of the past 13 weeks, and Japan and Europe equity funds easing. Equities saw outflows of $2.7bn and bonds recorded "very modest" outflows of $0.2bn.

"European marketing this week corroborates the super-high cash levels revealed in Feb and scarcity of bullish views; everyone, including ourselves, is a "seller into strength" which means risk can squeeze higher short-term into policy events," said the bank.

Flows are nonetheless not close to "full-capitulation" levels; investors increasingly regard policy meetings as a selling catalyst -not a buying catalyst- so selling pressure resumes if policy disappoints, according to BAML.

Emerging market debt funds recorded the first inflows in seven weeks.

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