Gold prices have notched a four-week high and a record price for UK investors, as the pound slid against the dollar and gilt yields stand at multi-decade highs.
In sterling gold reached a peak of £2,177 per Troy ounce, and in dollar terms $2,677 per oz.
"Because gold pays no interest, it usually falls in price when bond yields rise," says Adrian Ash, BullionVault director of research.
"Gold rising together with government borrowing costs signals how uneasy the markets are becoming over the UK's budget deficits and long-term debt."
Between 2002 and 2022, sterling gold prices went in the opposite direction to the yield offered by 30-year gilts for over half the time, says Ash.
"Since then – when inflation surged and financial sanctions against Russia for invading Ukraine led other central banks to buy gold as an escape from Western assets – they have moved together more than half the time."
"Last time gold made extended gains like this against a backdrop of rising yields was the 1970s," says Ash.
Last year saw gold prices up 35% at the peak in October at $2,790.90 per oz before the market consolidated into year-end when prices fell back to a low of $2,536.95 per oz in November.
Ahead of President-elect Donald Trump’s inauguration on January 20, Sharps Pixley, the gold brokerage, said in its monthly report that that given the rise in US Treasury yields, "gold seems to be holding up extremely well" and that the last time the yield was at this level last May gold prices were trading at $2,325 per oz.
"The last time the Dollar Index was this high was in November 2022 when gold prices were around $1,750 per oz.
"This could suggest that gold prices are over-priced, but it is probably more a case of how much gold is sought after as a safe-haven in these troubled and uncertain times."
Sharps Pixley wondered if "so much bullishness [is] just a sign of the trend, or perhaps it should be taken as a warning".
** Update: Adjusts peak prices, adds comment **