Financial investors and commodity markets

BIS Quarterly Review  |  March 2007  | 
14 March 2007

Commodities have attracted considerable interest as a financial investment in recent years. This article discusses the factors behind their growing appeal and assesses the extent to which market characteristics, such as price volatility, have changed as a result. The feature concludes that commodity markets have become more like financial markets in terms of the motivations and strategies of participants, but that the physical characteristics of commodity markets are still important.

JEL classification: G11, G15, Q41.