Investors and traders alike would benefit from being informed about macroeconomic news in the commodities sector. Much has been written about the performance of commodities in the world press and it’s worth exploring how news reports can move the markets and influence sentiment.
Is there a direct relationship between news and commodity prices? There is no evidence to support the claim that market participants buy and sell assets in response to news. Maybe it’s not enough to make intuitive observations or go by experience. Sometimes the senses may not make the right connections and even the most experienced investor could make an incorrect assumption.
The causal relationship between news and commodity prices
The answer is yes, there’s a causal link between news and a major commodity’s prices – gold – according to quantitative researchers Ankur Sinha and Tanmay Khandait. The study, published in 2020, examined more than 1000 news headlines about gold from reliable and established sources.
“…we performed a causality analysis, which reveals that the price related news on gold significantly impacts the prices of gold.” Tanmay Khandait, Ankur Sinha Study: ‘Impact of News on the…