What causes the prices of commodities such as gold/oil to rise/fall?

In the past few months, an area of the financial markets that has been well documented is the rising prices of commodities such as oil.





I know they have since fallen, but im quite an amature when it comes to these kind of things.





What factors made the price of oil rise in the first place?


What factors made it recently drop a little?





Why has the price of gold fallen recently.





I very much appreciate the answers, as it is something i simply do not quite understand.





Many ThanksWhat causes the prices of commodities such as gold/oil to rise/fall?
Supply,demand and speculators.What causes the prices of commodities such as gold/oil to rise/fall?
Long-term...supply and demand. Hence the massive long term growth of China and India and their insatiable appetite for commodities has driven them through the roof. The fact that we are approaching ';peak oil'; (google it) is the reason behind it's high price.


Short-term, speculators trying to make some a profit cause the prices to rise and fall as they essentially gamble by guessing (usually based on current events) what the price of a particular commodity will be in the future. Long term, therefore, the price will always rise because commodities are running out.
Price goes up when demand, or anticipated demand, goes up. Anticipated demand is what futures speculation is all about (';Marge, hand me my crystal ball, please.';)





A basic rule - if people want it, suppliers can charge for it. If more people want it, suppliers charge more.





Commodities trading is for most people shot-in-the-dark gambling. If you are an amateur, stay out of it until you are much much smarter about the market you're going to specialize in. The folks who make money at commodities spend a lifetime studying. Ignore the ads on TV about gold.
the main reasons for such sharp rise are speculations in the markets.


investors are tend to invest in 'hot' commodities hence rising the price for them and at some point the market stops rising reaching its peak point.
supply and demand. if there is a lot of need for oil, like there is today with cars etc etc, then the price goes up because there isn't enough.
The interplay between large buyers and sellers, speculation, supply and demand, and day to day emotional bias.
Speculators in the commodity market.
Supply and demand.
Commodities are subject to the twin forces of Supply and Demand, which vary over time.





Therefore, the price of oil can rise following geopolitical matters, like a war in the producing region. This could affect supplies, therefore other sources would have to be found. If a Company found out that its oil reserves were much less than originally thought, that could also lead to a price rise.





Interestingly in a time of high oil prices like now, Oil Companies are not incentivised to open up new fields, as the existing ones are returning a profit, while exploration for new ones is expensive and uncertain.





The demand for gold can fluctuate, however, half of consumption can be accounted for by the Asian Jewellery Market. Other applications are in the electronics business, so if a new factory is being set up, that increases the demand as well.





The Emerging Markets like the BRIC countries (Brazil, Russia, China and India) are also industrializing, so they are in competition with the Developed World for these resources now. Therefore we are about midway through a Natural Resources price cycle, which has been estimated to last about fifteen years.





Disclaimer:


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