Precious metals held strong gains in London on Wednesday, with gold hitting a one-week high above $3,300 per troy ounce. Silver reached its highest level in three weeks at $33.20, while platinum and palladium climbed to new 12-month and 6-month highs respectively, fueled by China’s largest platinum imports in a year.
Rising inflation and mounting concerns over Western government debt weighed on bond markets. U.S. long-term Treasury yields climbed as the yield curve steepened, signaling investor worries over fiscal sustainability following Moody’s downgrade of U.S. debt from ‘triple-A’ status. The expected $4 trillion increase in the U.S. debt ceiling, driven by tax cuts, may further pressure U.S. Treasury prices and the dollar.
The yield on 10-year U.S. Treasuries surpassed shorter-term yields, continuing a “bear steepening” pattern historically preceding recessions. J.P. Morgan’s fixed income manager noted the yield curve steepening as a clear sign of debt-related uncertainty.
Similar pressure hit Japan and the UK, with Japanese 30-year bond yields reaching all-time highs above 3.18%, and UK gilt yields rising to six-week highs near 4.73% despite recent Bank of England rate cuts. Weak demand for Japanese and UK government bonds points to investor caution.
In China, 10-year government bond yields edged up to 1.67%, while gold prices on the Shanghai Gold Exchange surged 3.1% to a one-week high of ¥775 per gram, marking the steepest increase since late April when global gold briefly touched $3,500 per ounce.
Gold prices in UK pounds, euros, and yen softened slightly amid a weaker New York stock market open, but the broader trend shows strong physical demand, especially from China, supporting the precious metals rally.
