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Disclaimer
This presentation is being provided solely for informational purposes. Mercantile
Exchange Nepal Limited does not warrant the accuracy or completeness of any
information provided in this presentation and such information is provided without
any correctness or condition of any kind. Neither Mercantile Exchange Nepal Limited
nor any other person associated with the creation of this presentation or its contents
shall be liable or responsible to any person for any harm, loss or damage that may
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indirect, third party, or consequential damages.
Fundamental Analysis
 The study of the factors that affect physical supply and demand.
 General economic principle says demand and supply determine price.
 Demand and supply situation helps predicting the price of commodities.
Generally,
– Demand > Supply = Higher Prices
– Supply >Demand = Lower Prices
Factors Affecting Demand & Supply
 Production and consumption Level
 Trade practices
 Government interference
 Taxes
 Political Events
 Weather
 Transportation cost
 Technological change, etc.
Factors Affecting Commodities Price
 Every major economic indicator released from major economies impact their
respective currencies.
 Positive economic data strengthens the currency and negative data weakens the
currency.
 This impacts the price of commodities accordingly.
 US dollar is regarded as the strongest currency that impacts commodity prices.
Gold…
 Data to watch
– State of US and Euro zone economy
– Factors that affect the US dollar
– Demand of jewelry in Indian and Chinese market
– Interest rate policy of major economies around the globe
– IMF announcement regarding it’s gold holdings
– Seasonal factors
 During the festival season in India and China, price tend to normally rise.
Crude Oil
 Crude oil
– Major Reserve
 Saudi Arabia, Iraq, Canada, Iran and Kuwait
– Largest Producer
 Saudi Arabia, Russia, US, Iran
– Major Consumer
 US, China, Japan, Euro zone
– OPEC countries control 40% supply of crude oil globally.
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