Price factors affecting commodity prices (Oil, gold, silver and other basic resources)

Supply-side price factors

Central Bank Sales (a gold specific factor) and Producer Dehedging.

Mining Production: volume produced and sold (negative correlation), mine strikes (positive correlation) and increasing production costs (positive correlation)

Demand-side price factors - positive correlation

Strong development of large emerging consumers, like China and India.

Investment Demand: Changes in habits of institutional & retail investors. The development of new narrow-focus investors like Gold, Silver, Oil etc Exchange-traded funds (ETFs) had a large positive impact of underlying commodities.

Large shifts in demand from major consumers. An example: Negative pressure on silver price due to continuous drop in silver demand from Jewelry and Silverware industry as well as Photography Industry.

Macroeconomics price factors

U.S. and Global Macroeconomics. Ongoing inflationary pressures, the massive U.S. trade deficit, and similar negative macroeconomic factors may have negative influence on most of commodities with just gold being influenced in positive direction.

War, invasion, looting, crisis, bank failures. These factors have a positive impact primarily on gold as as a store of value and a safe haven in times of crisis (Gold specific factor).

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