A Bank of America survey shows gold is now seen as the least overvalued it's been in two and a half years. The shift comes as fears of stagflation — a toxic mix of stagnant growth and high inflation — dominate investor sentiment.
What the survey found
The bank's monthly fund manager survey tracks how investors view various asset classes. For gold, the measure of perceived overvaluation dropped to its lowest level since early 2022. That doesn't mean gold is cheap — just that fewer investors think it's too expensive. The change is notable because gold had been hovering near all-time highs, which typically leads to overvaluation warnings.
Stagflation's grip
Stagflation fears were cited as the dominant macro theme by respondents. That's a shift from the past few years, when inflation was the top concern and growth was still holding up. Stagflation is a worst-case scenario for many traditional portfolios: stocks suffer in a downturn, and bonds get crushed by rising prices. Gold, which has no yield but holds value during crises, becomes more attractive in that environment.
Real assets in focus
The reduced overvaluation perception could drive more money into real assets as inflation hedges. Physical gold, gold ETFs, and even commodities like oil and copper are beneficiaries. The survey didn't specify how much money might rotate, but the sentiment change alone can shift market dynamics. Some investors had been waiting for a pullback to buy gold — they may now see this as the moment.
The question is whether this perception will actually translate into higher gold prices. The metal has already had a strong run, and any surprises in inflation data or central bank policy could change the picture quickly. But for now, the survey suggests gold's biggest headwind — being seen as overvalued — has faded.
