Oil Price Surge Sends Bond Yields Soaring, Gold Under Pressure

The recent surge in oil prices has led to higher government bond yields and put pressure on gold. Brent crude futures rose $4.16, or 4.6 percent, to settle at $94.65 a barrel on September 1, their highest close since July 24.

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 have 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 August 31, its highest level since mid-2008. The U.S. 10-year Treasury yield climbed to 4.81 percent early on September 2, while Japan's 10-year yield remained above 3 percent for the first time in three decades.