A is a market that trades in primary economic sector rather than manufactured products.
Soft commodities are agricultural products such as wheat, coffee, cocoa and sugar. Hard commodities are mined, such as gold and oil. Investors access about 50with purely financial transactions increasingly outnumbering physical trades in which goods are delivered.
are the oldest . Futures are secured by physical assets. Commodity markets can include physical trading and using spot prices, forwards, futures, and on futures.
Farmers have used a simple form of derivative for centuries for price risk management.
Exchange-traded funds (ETFs) began to feature commodities in 2003.
Gold ETFs are based on “electronic gold” that does not entail the ownership of physical bullion, with its added costs of insurance and storage in repositories such as the London bullion market.
According to the World Gold Council, ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity.
The commodities market will have three broadapart from brokers and the exchange administration – hedgers, speculators and arbitrageurs. Brokers will intermediate, facilitating hedgers and speculators.