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Finance
Commodity Trading
Buying and selling raw materials and primary goods — oil, gold, wheat, copper, coffee — either physically or through financial instruments like futures contracts.
Commodities are divided into categories: energy (crude oil, natural gas, gasoline), metals (gold, silver, copper, platinum), agricultural (wheat, corn, soybeans, coffee, sugar, cotton), and livestock (cattle, hogs). Each has its own seasonality, supply chain dynamics, and price drivers. Gold responds to inflation fears and dollar weakness. Oil responds to OPEC decisions and geopolitical tensions. Agricultural commodities respond to weather patterns and crop reports.
Retail traders access commodity markets through: futures contracts (direct, standardised, requiring margin), CFDs on commodities (accessible but expensive), commodity ETFs (like GLD for gold or USO for oil — low barrier, but tracking error can be significant for oil ETFs), and commodity producer stocks (buying BP for oil exposure, Barrick Gold for gold exposure — indirect but avoids futures complexity). Physical gold and silver ownership is also common for long-term wealth preservation rather than active trading.