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Commodities Trading Strategies

Read more about what commodities trading is, how to trade on commodities and discover a range of tips and strategies.

What moves commodity markets

What moves commodity markets

Commodities are a diverse group of financial assets. What affects the price of gold may not have any impact on soft commodities like cotton.

01Interest rates

Lower interest rates create lower real returns for investors. Lately a significant portion of government bonds offer negative yields. This can make gold more appealing as a safe haven. Or, rather, when interest rates rise gold can lose its appeal as it offers no yield.

02Dollar strength

Commodities are priced in dollars so the strength of the greenback matters. A weak dollar makes commodities more expensive; a strong dollar makes them cheaper – all else being equal.

03Weather

Soft commodities in particular are susceptible to the weather as it can affect production of crops such as cotton, coffee and wheat. But weather can also affect supply chains, which may temporarily impact oil. Wildfires in Canada, which disrupted oil supplies, were a recent example of how nature can impact commodities.

04Industrial demand

Energy and metals are driven in large part by industrial demand. Metals like platinum and palladium are used in industry, particularly the automotive sector. Oil and natural gas is used across all industries.

05Geopolitics

From pipeline outages in Nigeria to tensions in the Middle East, the complex world of geopolitics can impact commodity prices. Oil is particularly susceptible, while gold tends to benefit from global jitters.

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