HOW THE DOLLAR IMPACT COMMODITY PRICES.
All the kind of commodities typically follow and it has relationship between with the value of dollar.when the dollar price or value becoming lesser and lesser , the price of the commodity will be increasing .i can say that the dollar price always inverse relationship between the commodity , it may change accordingly (value of dollar).Eg;-In the short period of time we could see in the market of gold , the price of the dollar has been decreasing and the gold price has been increasing and inverse we could see that dropped the value of gold because that the dollar price has been increasing against other major foreign exchanges.
You can see from the practical world how they works with dollar , actually this is study from investment of diversified commodity price .when the dollar moves higher , commodity generally moves lower .when the oppositee happens as the dollar moves lower , commodity moves higher. We could understand that and it is some aspect we can considered and it is fair.
There are many reason why the value of the dollar has an impact on commodity price . the main one is that commodities are priced in dollars. When the value of the dollar drops , it will take more dollars to buy commodities.
Another reason is that commodities are traded around the world . foreign buyers will purchase our commodities our commodities like wheat , oil etc. when value of the dollar dropes , they will have more buying power and simple economies tells us that demand typically increase as price drop.
Commodity traders often keep a close eye on the value of the dollar.an easy way to monitor the dollar is to watch the price quotes on the dollar index . the index of the of how the dollar is valued against a group of other major currencies around the world. The price of the index is treaded like any other futures contracted and you can get quotes throughout the day.
