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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.
– 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
 This impacts the price of commodities accordingly.
 US dollar is regarded as the strongest currency that impacts commodity prices.
 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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