Market / Commodities

Commodities trading involves the buying and selling of raw materials or primary agricultural products. These can be categorized into two main types: hard commodities and soft commodities. Hard commodities include natural resources that must be mined or extracted, such as gold, oil, and natural gas. Soft commodities refer to agricultural products or livestock, such as wheat, coffee, sugar, and cattle.

Commodities are traded on various exchanges, including the Chicago Mercantile Exchange (CME), London Metal Exchange (LME), and the Intercontinental Exchange (ICE). Trading commodities can offer diversification to your investment portfolio and serve as a hedge against inflation, as commodity prices often move inversely to stock prices during market volatility.

The prices of commodities are influenced by a variety of factors, including supply and demand dynamics, geopolitical events, weather conditions, and economic indicators. For instance, an increase in crude oil demand from emerging markets or a disruption in oil supply due to geopolitical tensions can lead to significant price fluctuations.