Economics taught us that it's Demand and Supply gap that governs the price movement. Whether it's commodities, services , real estate or anything else, As soon as there is any sharp movement either way we look towards economics to find the answer.
If the price of a commodity increases, Economics tells us that it could be because of decrease in supply, increase in real Demand , price fluctuations in the currency, Prices of related commodities etc. The fact is that there are so many factors that Economics tells in case of price movement. The questions here is What exactly caused it ?
For General public its always the factor projected in the news. Petrol price increased because of rise in Dollar/Rupee rate and Dollar/Rupee rate rose because of rise in Gold demand. So Rise in Gold demand is the reason for increase in Petrol Price.
I am not saying this , its the Finance minister who said this few days back "asking public to buy lesser Gold" so that Dollar - Rupee rate could be contained.
Isn't it funny that Gold price increased all over the world but it just impacted our currency. Economics has justification for that too, We are the biggest consumer of Gold and hence we influenced Gold prices throughout the world.
See it in totality now, and it will seem weird and funny. But that's the fact, we have always been told reasons this way only.
The real problem with the Economic principles are that at any point of time , there are so many factors that influences price and you can project any that fits good in situation. You just need the help of mass media to project that. If nothing works, False news can always justify.
This principle of Demand and Supply is like Government fees which is prescribed by law to pay for administrative work. The way you pay a hefty premium as bribe over the actual fee to get your work done, the similar way it's the false practices that overshadow this basic principle of Demand and Supply.
Believe it or not but all markets with Derivative contracts are manipulated. The short term price movement is always in the direction that follows the position of operators in that market and long term movement is in the direction that fulfill the agenda of the influential.
It's not the news that influence the prices. It's the influential , who influence the prices, and make it a news.