Gold has retraced from its record high of $5,600 and now sits largely unchanged for the year, even as U.S. diesel prices hit an all-time high and reinforce bets on further Federal Reserve rate hikes. Bitcoin, often grouped with gold as a store of value, is down nearly 12% for the year as the same pressures weigh on both assets.
U.S. diesel prices surged to a record $6.29 a gallon this week, up nearly 80% year to date, according to TradingView. Gold is largely unchanged on the year, having retraced from the record high of $5,600 it reached earlier in 2026, while bitcoin is down nearly 12% at $76,400 for the year.
Diesel shock revives inflation fears
Diesel is rising mainly because of geopolitical tensions in the Middle East, including the ongoing U.S.-Israeli conflict with Iran, which has disrupted crude flows and raised risk premiums on refined products. Tight refinery capacity and strong demand from freight and industrial users have amplified the move, turning a regional supply shock into a global price spike.
Such spikes in pump prices typically feed through to transport costs, supply chains and, ultimately, consumer prices. JPMorgan said in a note Tuesday that higher diesel prices can show up in inflation through business costs first, and could potentially affect consumer prices over time depending on pass-through and demand.
Fed hikes into the supply shock
On Thursday, the Fed hiked rates by 25 basis points, lifting the benchmark borrowing cost to the 3.75%-4% range, even though higher rates are unlikely to address the key source of inflation: disruptions to oil supplies from the wars in Iran and Ukraine.
Goldman Sachs and Morgan Stanley expect another 25 basis point rate hike in October. Other central banks are tightening too: the European Central Bank recently raised rates, and the Bank of Japan is expected to do the same on Friday.
Gold and bitcoin face the same headwind
Record diesel prices present a headwind for gold, bitcoin and technology stocks alike. Like gold, bitcoin is widely seen as a store of value and sovereign hedge, but historically, higher borrowing costs have weighed on the cryptocurrency's market value, as seen during the 2022 Fed tightening cycle.
Source: CoinDesk
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