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How does the global economy affect the prices of commodities?

Curious about commodities

How does the global economy affect the prices of commodities?

The global economy has a significant impact on the prices of commodities as it affects both supply and demand. For example, when the global economy is growing, demand for commodities such as oil, metals, and agricultural products increases. On the other hand, when the global economy slows down, demand for these commodities tends to decrease, which can lead to a drop in their prices.

Moreover, the exchange rates between countries also affect the prices of commodities. For instance, if the US dollar strengthens against other currencies, commodities priced in dollars, such as oil, may become more expensive for countries using other currencies. As a result, demand for such commodities may decrease, leading to a drop in their prices. Conversely, if the US dollar weakens, commodities priced in dollars may become relatively cheaper, leading to an increase in demand and potentially higher prices.

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