People interested in commodity trading should learn more about the major commodities. It is important to have at least a general understanding of main commodities such as gold, silver natural gas, etc.
As a reminder, a commodity is a raw material or agricultural products in commerce that is interchangeable with other commodities. Generally, commodities are produced, extracted, and traded in large quantities to support global trading markets.
The commodity market has a direct influence on the price of most of the food. It means that commodities and their prices are part of everyday life.
In this article, we will discuss the commodities that are most attractive to traders around the world. Top commodities include gold, silver, crude oil, copper, natural gas, and coffee.
Let’s start with gold. Nowadays, it is possible to trade gold without having to own the metal physically.
Gold is the most valued metal. Investors are using this precious metal as a safe-haven asset when other financial assets are struggling due to politics or geopolitical tensions. The price of gold may rise during conflicts or other types of problems.
It is worth mentioning that there are different forms of gold available to traders and investors. The first one is the physical metal (bullions or coins). The second category is the gold certificate. Moreover, there are other options as well. Gold future, gold-based ETF and contracts for difference.
Silver, crude oil and other commodities
Silver is one of the rarest metals. Also, it is considered a high-demand commodity by many traders. Various industries are using this metal.
For example, apart from silver, it is used in silverware, electronics, etc. It is important to mention that the supply-demand balance is affecting the price of silver. Moreover, silver represents a barrier against inflation, thanks to its reverse relationship with the U.S. dollar.
Let’s discuss another major commodity, which is crude oil, which is cultivated into petroleum products such as gasoline, diesel.
Traders often are unable to take full advantage of crude oil fluctuations. There are factors why it is difficult to benefit from oil fluctuations. Those market participants are unaware of the hidden traps that can affect earning. Secondly, they haven’t learned the unusual characteristics of these markets.
Natural gas is one of the most popular commodities to day traders. Natural gas trading is known for its volatility. It is important to take into consideration that factors such as weather, supply, and demand can affect the price.
There are four key factors that affect the supply and demand for natural gas. One of them is the weather, as during extreme weather conditions prices can go higher and influence the supply and demand balance.
The second factor is storage. For example, if the is a surplus in storage, prices most likely will go down. Another important factor is the available alternatives. Nowadays, there are more eco-friendly sources of energy such as wind and solar power. The last one is economic growth. It means that the growth of industrial sectors will drive the prices higher as the demand for natural gas will outstrip the supply.