Insights 
VT 
Key Points
- Gold hit a fresh record of $3,508.5/oz before easing to $3,478.80.
- UK 30-year gilt yields rose to 5.697%, their highest since 1998, while France’s hit 4.513%.
- Sterling slumped over 1% to $1.3402; the yen also weakened as political turmoil weighed.
Gold extended its rally on Tuesday, smashing through previous records to reach $3,508.5/oz as traders scrambled for safety in the face of global debt concerns.
The move came as long-dated government bond yields surged to multi-decade highs, highlighting fears about fiscal sustainability from London to Paris.
UK 30-year gilt yields climbed to 5.697%, their highest in almost three decades, while France’s 30-year borrowing costs hit 4.513%, last seen in 2009.
Markets interpreted the moves as a warning signal about governments’ ability to rein in deficits, especially as UK finance minister Rachel Reeves prepares to raise taxes in her autumn budget and French Prime Minister François Bayrou faces a confidence vote.
Sterling bore the brunt of the selloff, sliding more than 1% to $1.3402, its weakest in nearly a month, while the yen fell to 148.47 per dollar after a close aide to Prime Minister Shigeru Ishiba resigned.
The dollar’s broad rebound tempered gold’s advance later in the session, but the metal still held near record levels, underscoring its renewed role as the hedge of choice.
Other precious metals followed gold higher, with silver touching a 14-year peak before retreating. Equities, however, faltered under the pressure of surging yields, with Europe’s Stoxx 600 down 0.6%, led by sharp losses in real estate stocks.
Technical Analysis
Gold (XAU/USD) has broken out of its months-long consolidation, moving firmly above the 3,400 resistance zone to trade around 3,478. This marks the first decisive push higher since April’s peak near 3,500.
The short-term moving averages (5, 10) have crossed above the 30-day MA, confirming bullish momentum, while the MACD has turned higher with widening histogram bars, showing strengthening buying pressure.
The next resistance sits near 3,500–3,520, which is the prior high and a key psychological level. A clean break above could open the way toward 3,600.
On the downside, immediate support now lies at 3,400, with stronger backing around 3,300. As long as gold holds above 3,400, the bias stays bullish, supported by safe-haven demand and shifting interest rate expectations.
Cautious Forecast
If bond yields keep climbing and fiscal credibility remains in doubt, gold could break beyond $3,500 toward $3,600. Any easing in bond-market stress or stronger dollar could see the metal retrace to the $3,400 handle, but safe-haven demand remains firmly in play.
