Commodities

In the stock market context, commodities are raw materials or primary agricultural products that can be bought, sold, or traded. These include items like gold, silver, crude oil, natural gas, wheat, and coffee.

Commodities are essential goods whose prices are determined by supply and demand, and they can be traded on commodity exchanges.

Types of Commodities

1. Metals – Gold, Silver, Copper, Platinum.
2. Energy – Crude Oil, Natural Gas, Coal.
3. Agricultural – Wheat, Rice, Sugar, Coffee, Cotton.
4. Others – Rubber, Lumber, etc.

How Commodities Are Traded in the Stock Market

1. Spot Market – Buying/selling the actual commodity for immediate delivery.
2. Futures Market – Agreement to buy/sell a commodity at a predetermined price on a future date.
3. Options on Commodities – Gives the right, but not the obligation, to buy/sell a commodity at a set price by a specific date.
4. Commodity ETFs & Stocks – Investors can also invest in commodity-linked ETFs or companies producing commodities.