#SECHaltsCryptoETFReviewsAmidFundingLapse Global Macro Update: Record Diesel Prices and What They Mean for Gold
US diesel hit a record national average of $6.53 per gallon in the third week of September. It has eased a little since then and now sits near $6.37. That is still more than 75% higher than a year ago.
Why prices are so high:
The war with Iran started in late February. Since then crude oil supply has been disrupted and tanker traffic in the Strait of Hormuz is still blocked. Diesel stocks are below the five year average and refining margins are at record highs. To calm prices the G7 plans to release 100 million barrels of oil over four months.
1️⃣ Inflation pressure
Diesel runs trucks and farms and ships and construction work. When it gets costly the price of everyday goods goes up too. This is called cost-push inflation.
2️⃣ Fed policy and gold: two forces pulling apart
The Fed is raising rates right now. It already hiked by 25bps in September.
🔻 Bearish side: If diesel pushes inflation up the Fed may hike again or keep rates high for longer. That can lift the dollar and bond yields and put pressure on gold.
🔺 Bullish side: If the fuel shock slows the economy then recession fear will grow. War risk in the Middle East can also boost safe haven demand for gold.
3️⃣ History check
In 2008 diesel rose to about $4.7 and then fell to near $2.3 in a few months. Gold also stayed under pressure for a while back then because the dollar got stronger. So oil shocks and gold do not always move together.
💡 Summary:
Gold is not moving on one factor alone. The full chain will decide its path: diesel ➔ inflation ➔ Fed ➔ yields ➔ dollar.
📅 Key data ahead:
Oct 14: CPI
Oct 15: PPI
#GoogleDocsMagic #MemeWatch2024 #dikesolomon $BTC
US diesel hit a record national average of $6.53 per gallon in the third week of September. It has eased a little since then and now sits near $6.37. That is still more than 75% higher than a year ago.
Why prices are so high:
The war with Iran started in late February. Since then crude oil supply has been disrupted and tanker traffic in the Strait of Hormuz is still blocked. Diesel stocks are below the five year average and refining margins are at record highs. To calm prices the G7 plans to release 100 million barrels of oil over four months.
1️⃣ Inflation pressure
Diesel runs trucks and farms and ships and construction work. When it gets costly the price of everyday goods goes up too. This is called cost-push inflation.
2️⃣ Fed policy and gold: two forces pulling apart
The Fed is raising rates right now. It already hiked by 25bps in September.
🔻 Bearish side: If diesel pushes inflation up the Fed may hike again or keep rates high for longer. That can lift the dollar and bond yields and put pressure on gold.
🔺 Bullish side: If the fuel shock slows the economy then recession fear will grow. War risk in the Middle East can also boost safe haven demand for gold.
3️⃣ History check
In 2008 diesel rose to about $4.7 and then fell to near $2.3 in a few months. Gold also stayed under pressure for a while back then because the dollar got stronger. So oil shocks and gold do not always move together.
💡 Summary:
Gold is not moving on one factor alone. The full chain will decide its path: diesel ➔ inflation ➔ Fed ➔ yields ➔ dollar.
📅 Key data ahead:
Oct 14: CPI
Oct 15: PPI
#GoogleDocsMagic #MemeWatch2024 #dikesolomon $BTC
