When people talk about commodity trading, hard commodities are usually the first thing that come to mind. These are natural resources that are mined or extracted—not grown—and they play a critical role in the global economy. Some of the most actively traded hard commodities include crude oil, gold, copper, and other metals.
If you’re new to this space, here’s a simple breakdown of what hard commodities are, how they’re traded, and what moves their prices.
What are hard commodities?
Hard commodities are raw materials that come from the earth. Unlike soft commodities, which are agricultural (like coffee or sugar), hard commodities are non-perishable and often used in industrial production, energy, and financial hedging.
Examples include:
- Crude oil
- Natural gas
- Gold and silver
- Copper, aluminum, and other base metals
These are traded on global exchanges and are heavily influenced by geopolitical events, supply disruptions, inflation trends, and economic growth forecasts.
Oil trading
Crude oil is the most traded commodity in the world, and its price affects everything from fuel costs to global inflation. It’s influenced by OPEC decisions, geopolitical conflicts, U.S. inventory levels, and global demand forecasts. Traders often follow West Texas Intermediate (WTI) and Brent Crude futures to speculate or hedge against price changes.
Gold trading
Gold has been used as a store of value for thousands of years, and it’s often seen as a safe haven during economic uncertainty. When inflation rises or markets get shaky, demand for gold tends to go up. Prices are also affected by interest rates, central bank policies, and currency movements, especially the U.S. dollar.
Metals trading
Base metals like copper, aluminum, and nickel are essential in construction, electronics, and manufacturing. Copper, for instance, is seen as a global economic indicator because it’s used so widely. These markets are driven by industrial demand, mining output, and global infrastructure trends, especially from big economies like China.
Final thoughts
Hard commodities offer traders exposure to some of the most vital parts of the global economy. While they can be volatile and are influenced by a wide range of factors, they also provide opportunities to hedge against inflation and diversify portfolios. Whether you’re tracking oil prices or gold futures, understanding what drives these markets is essential for anyone looking to trade them effectively.
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