Individual Report on Commodity Prices: Gold, Oil, and Economic Factors

This report examines the relationship between gold and oil prices within the context of economics and globalisation. It provides a detailed analysis of relevant data from the past 10 years, focusing on the UK market. The report explores the link between gold and oil prices, explaining how they often move in tandem and are influenced by global economic trends, inflation, and expectations of long-term growth. It delves into factors impacting gold prices, including demand and supply dynamics, elasticity of demand and supply, the role of substitutes and complements, and the effects of inflation and Brexit. The report utilizes economic concepts to explain price fluctuations and provides a comprehensive overview of the chosen commodity within the global market. The report concludes with a summary of key findings and references to support the analysis.

ECONOMICS AND GLOBALISATION

 Introduction
 Relevant data for the 10-year period
 The link between the commodity prices and oil prices
 Factors that have impacted on the commodity prices.
 Conclusion
 References
Table of content

 Economics and globalization refers to the increasing of world economics as a result
of growing scale of cross-border trade of commodities and service.
 The chosen commodity for this study is Gold.
 The present study will highlights the relationship between a commodity as well as
an old price within a country.
 For that, report will describe the relevant data for the last 10 years within a UK
regarding to gold.
Introduction

Source: 10 Year Gold Price History in UK Pounds per Ounce. 2020
Relevant data for 10 year period

 Link between gold and oil prices can be
understood as widely essential aspect which
provides institutional quality market research,
where more than 60 percent of time within global
levels gold and crude oil price rise.
 This explains when gold price rises crude oil price
also rises, which explains that the economic
impact of both interrelationships is strongly
diversified within global levels.
The link between gold prices and oil prices

 Quoting price of oil affects prices of all major oil producers and regulate further supply of oil
in order to achieve demand targets, where this market is also largely determined by gold
supply consumption within international platforms.
 Oil prices are believed to be predictors of gold prices where they share similar traits and are
often also considered essential unique commodities.
 They are the raw materials used to meet other fundamental needs because of the supply
demand effects on commodities in general, where reserves diminish in supply, brings rise on
oil prices and gold prices then rise demand.
CONT….

 The belief is that both oil prices and gold prices move in sync because they are affected by
commodity and industry trends within each other, which further leverages performance
aspects for bringing on continuous fluctuations.
 Inflation within global levels have strong impact to drive price of gold in same direction,
where higher oil price drives aggregate price rise on petroleum commodities which explains
the fact that oil prices are primary drivers of higher gold prices within global economics.
 Both oil and gold are driven by expectations within long term economic growth scenarios,
where these two assets show significant correlation and have impact on each other within
market structure goals within longer run.
CONT…

 There are list of the economic
concepts which has been used, that
cause direct impact upon the Gold
which includes demand and supply,
inflation, Interest rate, Import duty
and Government reserves.
 Some of them will be discussed in
order to determine how the Gold is
affected due to some factors:
Presenting the factors that affect the
commodity (Gold)
Demand and supply analysis
Elasticity of demand and
supply
Substitutes and compliments
Inflation and Brexit

 Demand and supply plays an
important role in determining the
prices. Unlike oil, gold is not a
consumable product.
 Therefore, it can be stated that the
price of the gold is increase when the
demand is increases, in this supply of
the gold is relatively scarce.
Demand and supply analysis

 It has been realized that forecasting assets price has never been easy and the
investors always needs to be cautious. However, due to uncertainty of the
economic growth during pandemic, it has been realized that if the low interest rate
prevail, then the price of Gold will continue to rise.
 Also, if there is a negative news on economic growth, then it will be greater to
increase the price of the gold. Which in turn shows that demand of the gold will be
decreases, such that due to increase in the price, individuals are not interested into
invest within such factor that causes rise to price of a products.
 Demand of the gold also overlaps with gold supply within in turn a combination of
gold mining as well as recycling.
Continued…..

Elasticity of the demand and supply
 Elasticity of the demand and supply
is another factor that also affect the
overall price of Gold in opposite
manner.
 It is also analysed that degree of level
changes by the price of commodity
such that hold commodity is directly
not affected in the demand because of
luxurious goods.
 It has been identified that gold price
elasticity is negative and higher the
price of gold, higher is the demand
for Gold. Also, more than 70% of the
customers are changes their
perception towards a fluctuation in
the gold price.

 Substitute and complements are do
affect the Gold because substitute
goods are product which satisfy a
common wants. In the context of the
Gold, there is a no substitute which
satisfy the wants of a Gold.
 It has been analysed that the demand of
Substitute products increases which
somehow decrease the demand of
complement and as a result, the price
of the product price increases.
Substitute and compliments

 One of the most affecting factor that
also cause a direct impact upon the
price of the Gold.
 Such that higher level of inflation
increase the price of the Gold
whereas the lower level of inflation
decreases the price of the Gold.
Inflation and Brexit

 By summing up the PPT, it has been concluded that there is a change in the price of
the Gold and from last 10 years, the price of the Gold also affected and it is also
depend upon different factors.
 There is a direct link identified within the Gold price and oil prices. Such that they
both shared a positive relationship between each other. Like, if the price of the
Gold increases, there will be a direct impact upon the oil prices.
 Moreover, it has been also concluded that there are various factors identified which
affect the chosen commodity such that Demand and supply analysis, Elasticity of
demand and supply and Substitutes and compliments.
Conclusion

 Bouoiyour, J., Selmi, R. and Wohar, M.E., 2018. Measuring the response of gold
prices to uncertainty: An analysis beyond the mean. Economic Modelling. 75.
pp.105-116.
 Erten, B. and Ocampo, J. A., 2021. The future of commodity prices and the
pandemic-driven global recession: Evidence from 150 years of data. World
Development. 137. p.105164.
 Eryiğit, M., 2017. Short-term and long-term relationships between gold prices and
precious metal (palladium, silver and platinum) and energy (crude oil and gasoline)
prices. Economic research-Ekonomska istraživanja. 30(1). pp.499-510.
 Guan, L. and et.al., 2021. The volatility of natural resource prices and its impact on
the economic growth for natural resource-dependent economies: A comparison of
oil and gold dependent economies. Resources Policy. 72. p.102125.
 Paul, M., Bhanja, N. and Dar, A. B., 2019. Gold, gold mining stocks and equities-
partial wavelet coherence evidence from developed countries. Resources
Policy. 62. pp.378-384.
REFRENCES

 Plakandaras, V., Gogas, P. and Papadimitriou, T., 2021. Gold against the
machine. Computational Economics. 57(1). pp.5-28.
 Raza, S.A., Shah, N. and Shahbaz, M., 2018. Does economic policy uncertainty
influence gold prices? Evidence from a nonparametric causality-in-quantiles
approach. Resources Policy. 57. pp.61-68.
 Sun, Y., and et.al, 2021. Connectedness between oil and agricultural commodity
prices during tranquil and volatile period. Is crude oil a victim indeed?. Resources
Policy. 72. p.102131.
 Online
 10 Year Gold Price History in UK Pounds per Ounce. 2020. [Online]. Available
through: <https://goldprice.org/gold-price-charts/10-year-gold-price-history-in-
uk-pounds-per-ounce>.
 Gold demand. 2020. [Online]. Available through:
<https://www.bullionbypost.co.uk/index/market-commentary/gold-demand/>.
 7 common factors that influence Gold Prices. 2020. [Online]. Available through:
<https://www.fool.com/investing/2016/10/13/7-common-factors-that-influence-
gold-prices.aspx>
Continued…