The same happened this week after Donald Trump, in his usual shoot-from the hip way, accused Japan, China and Germany of deliberately undervaluing their currencies to gain an advantage in trade. The comments caused a frenzy in the forex markets and a sell-off of the dollar against the euro and the yen.
Commodities are produced around the world: gold in South Africa, oil in the Middle East and Russia, copper in Chile, but they are sold in the international markets in dollars, so any dollar weakness makes them more expensive at source. It also makes them cheaper to buy for holders of other currencies.
After Trump’s comments Brent crude rose to $57/bbl, gold prices initially increased $20/oz and copper prices rose to almost $6,000/t, a level at which it last traded consistently in autumn 2015. Even natural gas, which has lost 16% in value during January, increased about 1.5%.
The effect was short-lived and by Wednesday and Thursday gold lost some ground, and copper stabilized, but oil prices remained higher.
As the week unfolds the dollar continues to decline as US investors become a bit more cautious about what kind of effect Trump will have on American economy. This will keep commodity prices supported, at least in the short term.