Commodity Market FAQs

A commodities market is a platform where raw materials or primary products are traded. These products include agricultural products, metals and energy resources. Traders can buy and sell these goods in their physical form or as derivative contracts that have commodities as the underlying assets. The prices of goods in the commodities market are affected by demand, supply and general market conditions.

There is no universally ‘best’ commodity for trading as it depends on the market conditions, your specific expertise and risk tolerance. However, some popular commodities for trading in the Indian markets include gold, silver, crude oil and agricultural products like cotton. It is crucial to research and understand specific commodities before trading them.

Yes, gold is a commodity. It is a precious metal that is one of the most traded commodities globally as well as in India. Gold is considered a safe-haven asset that is expected to retain or even increase in value during economically weaker periods. In the Indian commodities market, gold futures and options are actively traded on exchanges like the MCX.

You can buy physical commodities directly (like gold from jewellers or agricultural products from farmers) or trade in commodity derivatives. For derivatives trading, you must open an account with a SEBI-registered brokerage service provider. You can then trade commodity futures and options on exchanges like the MCX and NCDEX.

To start commodity trading, you first need to educate yourself about this market segment and the risks it carries. Then, choose a SEBI-registered broker and open a trading account. Once you complete the KYC procedures and fund your account, you can start with small trades to gain more experience.