What are commodities and how are they traded?
Curious about commodities
Commodities are raw materials or primary agricultural products that can be bought and sold, such as gold, silver, oil, grains, and livestock. They are traded on commodity markets, which can be physical or virtual, and allow buyers and sellers to exchange commodities for cash. In India, the most popular commodity exchange is the Multi Commodity Exchange (MCX), where commodities are traded through futures contracts.
In a futures contract, the buyer agrees to purchase a specific amount of a commodity at a specific price, at a future date. Similarly, the seller agrees to provide the commodity to the buyer at the specified price and date. The price of the commodity is determined by supply and demand factors, and can fluctuate based on various economic and geopolitical factors.