Common factors of commodity prices

From ECB’s Research Bulletin:

“Looking at the co-movement in a broad group of commodity prices is key to identifying the nature of commodity price fluctuations. In conclusion, this Research Bulletin article highlights a very simple strategy that central bankers can use to understand the drivers behind commodity price fluctuations. If commodity prices in all markets tend to move in the same direction and by a similar magnitude, then the global demand for commodities is largely responsible for those movements. If commodity price variations are instead localised to a few markets and/or there are important changes in relative prices, then other specific factors related to supply and demand in individual markets are likely to be at play.”

Posted by at 8:14 AM

Labels: Energy & Climate Change


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