The prices of commodities are determined by the following factors:
- Demand and Supply: If there are more buyers than sellers for a particular commodity, prices rise, and if there are more sellers than buyers, prices fall.
- Macroeconomic and geopolitical factors: Commodities are generally sensitive to geopolitical factors and the general economic situation.
- Speculative trading: Speculators are participants who engage in commodity markets with the primary objective of profiting from price fluctuations without having to take physical possession of the underlying commodity. Sustained, coordinated actions by speculators on the markets can also influence prices.
