Oil rally lifts bond yields, weighs on gold

ISTANBUL

A renewed surge in oil prices pushed government bond yields higher and weighed on global stocks and gold as fresh U.S.-Iran fighting revived concerns over prolonged disruption to energy flows through the Strait of Hormuz.

Brent crude futures rose $4.16, or 4.6 percent, to settle at $94.65 a barrel on Sept. 1, their highest close since July 24.

Prices extended their gains in early trading on Sept. 2, climbing to around $95.60.

The advance followed new U.S. strikes on Iranian targets and further threats from both sides, increasing concerns over crude shipments through the Strait of Hormuz.

Higher energy costs added to inflation worries and strengthened expectations that central banks may have to raise interest rates more quickly.

The yield on a Bloomberg index of global government bonds reached 3.72 percent on Aug. 31, its highest level since mid-2008.

The U.S. 10-year Treasury yield climbed to 4.81 percent early on Sept. 2, while Japan’s 10-year yield remained above 3 percent for the first time in three decades.

Markets were pricing in a roughly 68 percent chance that the Federal Reserve would raise rates by 25 basis points at its Sept. 15-16 meeting, up from about 40 percent a week earlier.

Expectations shifted after Fed Chair Kevin Warsh’s hawkish remarks at the Jackson Hole symposium and strengthened further as oil prices rose.

The Dow Jones Industrial Average fell 0.8 percent on Sept. 1, while the S&P 500 lost 0.7 percent and the Nasdaq Composite declined 1 percent.

Gold also came under pressure as rising bond yields increased the opportunity cost of holding non-yielding assets.

A firmer dollar added to the decline, with spot gold trading near $4,320 an ounce in early Asian trading on Sept. 2.

In Türkiye, gram gold fell to around 6,700 liras, down from levels above 7,200 liras in late August.