Economics

Discuss 5 factors that affects commodity prices (25 marks)

Examples of the factors are:

• Expected levels of inflation, particularly for precious metals
• Interest rates
• Exchange rates, depending on how prices are determined
• General economic conditions
• Costs of production and ability to deliver to buyers
• Availability of substitutes and shifts in taste and consumption patterns
• Weather, particularly for agricultural commodities and energy
• Political stability, particularly for energy and precious metals