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Supply and demand are important factors that affect commodities. Taking oil as an example, if the supply of oil is expected to be strong, and market demand for it does not change much, then the oil price will fall. Often, tensions in the Middle East affect the stability of the oil supply, resulting in a shortage of supply in the market, and pushing oil prices higher due to expectations for demand surpassing supply in the short term.
Another important factor is inflation. When inflation rises, investors need more money in exchange for goods due to currency depreciation, which will also affect the price of commodities.
If you wish to trade commodities, gold and crude oil will probably be your first choices to start because gold is an important hedging tool in the market. When the world encounters political instability or economic downturns, people will worry about currency depreciation, and gold will often become one of the options against currency depreciation.
When an international emergency breaks out, the price of gold will experience large fluctuations. Unlike currency pairs, the price of gold is affected not only by the countries involved, but also by global factors. Therefore, gold provides investors with more investment opportunities.
With regards to crude oil, investors would easily understand the reasons for fluctuations in its supply and demand by reading international news. Like gold, oil prices are affected by global factors, which provides more opportunities for investors.