Bond Yields Surge as Energy Prices Soar, Gold Plummets

European and UK government bonds have continued to fall, with yields climbing as energy markets remain volatile. Brent crude has surged 51% since the start of March, eclipsing the 46% monthly gain recorded in September 1990 during the Gulf War. The benchmark closed at $112.57 a barrel on Friday, up from $72.48 on 27 February – the day before the escalation of the Iran‑Israel conflict – and peaked at $119.50 in March, the highest level since June 2022.

West Texas Intermediate also advanced 48% this month, on track for its strongest performance since May 2020, despite the coordinated release of 400 million barrels from emergency reserves on 11 March. BloombergNEF estimates that the Middle East dispute has removed roughly 9 million barrels of oil per day from global supply.

Oil’s rally has outpaced other asset classes. Gold has fallen almost 15% since March began, marking its worst monthly decline since 2008 and the fifth‑largest drop in five decades. The precious metal has also been pressured by a $3 billion sale of bullion by the Turkish Central Bank, which trimmed its reserves by nearly 50 tonnes to 772 tonnes to shore up the lira.

Equity markets have mirrored the turbulence. The Dow Jones Industrial Average slipped into a correction, falling more than 10% below its recent record high, while the FTSE 100 dropped over 8% – the steepest decline since March 2020. Investors remain wary of prolonged supply disruptions to oil from the Gulf, even as the Trump administration extended a 10‑day window for Iran to reopen the Strait of Hormuz.

"Markets appear to be placing less weight on White House rhetoric and more on the underlying supply risks," noted Fawad Razaqzada, analyst at City Index.

With bond yields rising and energy prices high, the financial landscape remains fraught, underscoring the importance of vigilant market monitoring for investors and policymakers alike.