Gold Hits $3,547 as Sterling Slides, Bond Yields Surge

Spot gold reached a record $3,546.99 early Wednesday as investors sought safety amid rising geopolitical tensions and soaring bond yields. The pound weakened further to $1.3375 after UK 30-year gilt yields jumped to their highest level since 1998. Meanwhile, US equity futures edged higher and oil held near monthly highs, as markets absorbed a military display in China and awaited key economic data.

Equities

The FTSE 100 fell 0.9% on Tuesday, marking its worst session in nearly five months. Banks, industrials and utilities led the decline, while investors reacted to rising government borrowing costs and concerns over the UK’s fiscal direction. Thirty-year gilt yields rose to 5.72%, the highest since May 1998, and sterling dropped more than 1.5%. The FTSE 250 dropped 2.2%.

Among individual UK stocks, Lloyds, Barclays and NatWest each closed around 2% lower after recent pressure linked to calls for additional taxes on banks. Segro fell 3.9% and SSE dropped 3.7% as higher yields weighed on property and utility stocks. Legal & General and Phoenix each lost over 4%. Retailers were also weaker, with Tesco and M&S closing in negative territory. British American Tobacco declined alongside other consumer staples. In the travel sector, IAG fell 3.3% and Whitbread was down 4.5%. Rolls-Royce slipped 2.9% on weakness across aerospace and defence.

Ithaca Energy was the FTSE 250’s worst performer, falling 13.3% after its two largest shareholders sold a 3% stake at a discount. Oxford Nanopore dropped 12.8% after keeping its full-year guidance unchanged, disappointing those anticipating an upgrade. Energy stocks added 0.5%, supported by firming oil prices, while Fresnillo rose 5.2% on stronger gold prices.

In the US, the S&P 500 fell 0.7% on Tuesday as traders reacted to a federal appeals court ruling that declared most of former President Donald Trump’s tariffs illegal. The Nasdaq dropped 0.8% and the Dow lost 0.6%. Trading resumed after the Labor Day holiday with a cautious tone, ahead of Friday’s key US payrolls report.

Kraft Heinz dropped 7% after announcing it would split into two companies—one focused on grocery items and the other on sauces and spreads. PepsiCo rose 1.1% after Elliott Management disclosed a $4 billion stake and launched an activist campaign. Real estate was the worst-performing sector on the S&P 500, falling 1.7% as 30-year Treasury yields reached their highest levels since mid-July.

Forex & Commodities

The US dollar rose across the board. It gained against both sterling and the Japanese yen, the latter slipping to 148.40 per dollar, its weakest level since early August. The euro was also down against the dollar, trading at $1.1637. The dollar index was up at 98.37 by late Tuesday. Support for the greenback came as US Treasury yields moved higher, while investors awaited Friday’s non-farm payrolls report for further guidance on interest rate expectations.

Spot gold rose on Wednesday morning, reaching an all-time high of $3,546.99 before easing slightly to $3,537.76 per ounce. Demand for the metal remained strong amid growing confidence that the Federal Reserve will cut interest rates later this month. SPDR Gold Trust reported a 1.32% increase in holdings on Tuesday, reaching 990.56 tonnes — the highest level in over a year.

Oil prices edged slightly lower in Asian trading on Wednesday, but remained close to one-month highs. Brent crude was down 19 cents at $68.95 a barrel, while West Texas Intermediate slipped 16 cents to $65.43. Prices had climbed more than 1% on Tuesday following new US sanctions on shipping companies and vessels accused of smuggling Iranian oil disguised as Iraqi crude.