Commodities in the Forex market
All traders should be familiar with commodities. Traders are always trying to predict the market movements in order to maximize their profits. Although it may sound easy, doing so is pretty difficult. Professional traders realize that Forex rates not only depend on factors related to currencies and economies. They also depend on factors such as supply and demand and interest rates. In Addition, and importantly, on commodity prices.
Most Important Commodities.
Following are the most important commodities that influence the forex markets.
Crude Oil. The title of the most important commodity certainly belongs to crude oil. After founded in rock formation, it’s being refined into products of Petroleum. This is clearly one of the most expensive commodities. As the natural stock is depleting at a radical pace and prices are extremely volatile. Given its importance, most of the currencies depend a lot on crude oil. The crude oil industry is one of the most important ones. It affects economics and environment all over the world.
Gold. The Gold is regarded with the highest honor. This rare metal is a wealth status symbol with a unique color. Its metallic qualities ensure that it will stay around for a very long time. Gold is also one of the most profitable commodities in the trading markets. The gold reserve of a country is an important measure of the economic strength. Thus, it has the capability to influence the market rates to a huge extent.
Natural Gas. Natural gas is a mixture of methane, nitrogen and CO2. Accounts for more than 25% of total energy consumption in the world. In the U.S its main use is to heat homes. Thus, the prices of this valued energy source affect most of the Forex currency pairs. More than 95 percent of Natural Gas is located outside of U.S. The largest fields are located in Qatar.
Silver. Another precious metal. Silver is one of the most conductive materials. It’s also one of the whitest ones. It uses for many purposes. Some that you know are jewelry and money. Traditionally used for industrial and domestic applications throughout the world. Trending prices of silver exert a lot of influence on the Forex currency pairs. Its price is derived from its availability in the open market.
Platinum. The Platinum is material is rare. Its metallic qualities are unique. It makes it useful for industrial purposes. Platinum also uses against cancer. It’s done by forms of chemotherapy. This is a very expensive commodity which has the capability to influence market prices of Forex currencies.
Copper. Copper is a versatile material. Its prices reflect the state of world economy. This reddish metal is one of the most traded commodities. It’s being used in industries and households for centuries. Thus, fluctuations in its prices almost certainly affect the currency prices. Now-days there is high demand for copper. Especially from countries as India and China. Some analysts expect that it will run out of the world. A process that may take 20-60 years.