A commodity is a basic physical good — like gold, oil, or agricultural produce — that can be traded.
Commodities are raw materials and basic goods that are traded on global markets. They are generally divided into categories such as metals, energy, and agricultural products. Commodity prices are driven by real-world supply and demand — factors like weather, production levels, and global economic conditions can all move prices. Some commodities are also watched closely as indicators of wider economic health or as a store of value during uncertain times. For traders, commodities offer exposure to a different set of forces than stocks or currencies, which is one reason they are followed as part of a diversified view of the markets.
Think of the everyday goods the world constantly needs — the metal in your phone, the fuel in a car, the wheat in bread. The prices of these basic materials rise and fall with supply and demand. Commodity trading is simply engaging with those price movements.
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