Gold
Gold is driven by real yields, the US dollar, central-bank buying and safe-haven demand. As a non-yielding asset, gold becomes more attractive when real yields fall, and it tends to have an inverse relationship with the dollar. It is also held as a hedge against monetary debasement and geopolitical risk.
Crude Oil
Crude oil is the most macro-sensitive commodity, driven by global growth, OPEC+ supply decisions, inventories and geopolitics. Oil prices are a real-time read on the global economy and a significant input to inflation.
The USD Relationship
Most commodities are priced in US dollars, so a stronger dollar tends to depress commodity prices and vice versa. The dollar-commodity inverse relationship is one of the most important cross-asset relationships, though it is a tendency, not a rule.
Inflation & Supply/Demand
Commodities are a direct input to inflation. Supply shocks — whether from geopolitics, weather or policy — can move prices independently of demand. Understanding the balance of supply and demand, and the elasticity of each, is central to commodity analysis.
Macroeconomic Conditions & Geopolitics
Commodities are cyclical. Industrial metals and energy track the global growth cycle; precious metals track monetary and risk conditions. Geopolitical risk premia can be large and sudden, particularly in energy.
Cross-Asset Implications
Commodity moves feed back into inflation, which feeds into central-bank policy, which moves currencies and equities. The commodity-FX-rates nexus is a core cross-asset relationship and a key area of focus.
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