What drives commodity prices?
Commodity prices are driven by a constantly shifting balance between global supply and demand, amplified by financial market positioning and macroeconomic conditions.
Supply-side factors include OPEC+ production decisions for oil, mine output and geopolitical disruption for metals, and weather events and crop yields for agricultural commodities. A frost in a major coffee-growing region, a mining disruption in Chile, or a hurricane in the Gulf of Mexico can all move commodity prices significantly within hours.
On the demand side, Chinese economic growth is the single most important driver for many industrial metals and energy commodities. A slowdown in Chinese manufacturing activity reliably weighs on copper and iron ore prices. US economic conditions influence oil demand through consumption patterns and the strength of the dollar, since most commodities are priced in USD.
Financial market dynamics layer on top of these fundamentals. Commodity prices often rally during periods of inflation, dollar weakness or geopolitical uncertainty, as investors seek tangible assets. Gold in particular has historically served as a safe-haven during market stress, as its record-high price in early 2026 reflected.