Commodity Market Prices
Commodity markets can be volatile, and there may not seem to be any logic or clear reason for their movements. Commodity prices can be unpredictable even for the most experienced traders. However, generally speaking, price movements depend on supply and demand. When the market shows less supply, prices rise. Conversely, larger quantities lead to lower prices.
Sources for Commodity Research
The following sources of news and research can help investors navigate the commodity and futures markets: FutureSource: An excellent source for real-time market news on all commodity and futures markets. (Free.) The Hightower Report: An excellent daily report covering all markets. (Paid service) FuturesBuzz: Market commentary from a variety of analysts. Full Disclosure: The author provided commentary for this site as well. (Free.) Inside Futures: Market commentary from a variety of analysts. (Free.) Futures Magazine: The leading magazine that strictly covers futures markets. SFO Magazine: Another good magazine covering stocks, futures, and options.
The Bottom Line
There are three main reasons why commodity prices move up or down. The first reason is the fundamental condition of the commodity market. If current inventories exceed demand, the surplus tends to push prices down. But if demand is greater than the available quantities, the inventory shortfall tends to drive prices up. Second, commodity prices fluctuate due to the technical condition of the market. Price charts often influence the behavior of investors, traders, and other market participants. Since everyone studies the same data, the herd mentality of collective buying or selling has a significant impact on prices. Finally, commodity prices are affected by changes in the global economic and political landscape.
With all these influencing factors, predicting commodity price movements is quite difficult. However, commodity professionals who analyze past market behavior may have an edge in anticipating future price movements.
Source: https://www.thebalancemoney.com/why-commodity-prices-move-up-and-down-809315
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