Commodities

What are commodities?

Commodities are raw materials that can be bought and sold. Commodities like metals and energy are used as inputs in producing goods and services.
Metals (gold, silver, copper) and energy products (crude oil, natural gas) fall into “hard commodities” and can be mined or extracted. Because of their role in the economy and their nature, commodity prices shift independently of other assets like stocks, providing valuable diversification for traders and investors.
Metals and energy are needed for industrial production. They are widely used by manufacturers, making their price movements relevant to the global economy.

How to trade commodities

Purchasing and selling commodities does not require you to own the physical product. You simply speculate on price changes, like with other derivatives. Commodities are finite. Therefore, unlike many other assets, price is primarily driven by supply and demand. When supply increases, prices tend to fall. If supply decreases, prices may rise. Meanwhile, demand and supply are influenced by factors such as weather, economic activity, and geopolitical shifts.