Commodity Markets
Commodities are physical goods — gold, oil, wheat, coffee. They trade on specialized exchanges with unique drivers and opportunities.
What Are Commodities?
Commodities are raw materials used in production. They fall into two categories:
Hard Commodities
- Metals: Gold, silver, copper, platinum
- Energy: Crude oil, natural gas, gasoline
Soft Commodities
- Agriculture: Wheat, corn, soybeans
- Livestock: Cattle, hogs
Key features:
- Physical delivery (usually settled in cash)
- Supply/demand driven
- Seasonal patterns
- Unique market drivers
Market Characteristics
Size and Volume
| Commodity | Daily Volume | Exchange |
|---|---|---|
| Oil (WTI) | $15B+ | CME |
| Gold | $10B+ | COMEX |
| Natural Gas | $5B+ | CME |
| Agriculture | Varies | CBOT |
Trading Hours
Commodity Futures Hours
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Energy (CL) ██████████████████ 23:00-22:00 (next day)
Metals (GC) ██████████████████ 20:00-16:00 (next day)
Agri (ZC) ██████████████ 08:30-13:20
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Most trade nearly 24 hours
Leverage
- Metals: 10-20x
- Energy: 10-30x
- Agriculture: 10-20x
Volatility Profile
Typical Movement
| Commodity | Daily Range % | Volatility |
|---|---|---|
| Gold | 1-2% | Medium |
| Silver | 2-4% | High |
| Oil | 2-5% | High |
| Natural Gas | 5-10%+ | Very High |
| Wheat | 2-4% | High |
Volatility Characteristics
- Energy = most volatile — Supply shocks
- Gold = stability — Safe haven
- Agri = seasonal — Weather dependent
- News-driven — EIA, OPEC, weather
Best Strategies for Commodities
1. Trend Following
Why it works: Commodity super-cycles
| Setup | Timeframe | Example |
|---|---|---|
| MA crossover | Daily | Oil uptrend |
| Breakout | 4-Hour | Gold break |
2. Safe Haven
Why it works: Gold rises in uncertainty
| Setup | Timeframe | Signal |
|---|---|---|
| Risk off | Daily | Gold up |
| Inflation hedge | Daily | Real rates down |
3. Breakout Trading
Why it works: Gap opens on news
| Setup | Timeframe | Confirmation |
|---|---|---|
| Level breakout | 1-Hour | Volume |
4. Seasonals
Why it works: Predictable patterns
| Seasonality | Trade |
|---|---|
| Heating demand | Nat gas winter |
| Harvest | Ag fall |
Major Commodities
Precious Metals
| Commodity | Ticker | Driver |
|---|---|---|
| Gold | GC | Real rates, USD |
| Silver | SI | Gold + industrial |
| Platinum | PL | Auto demand |
Energy
| Commodity | Ticker | Driver |
|---|---|---|
| Crude Oil (WTI) | CL | Supply, demand, OPEC |
| Natural Gas | NG | Weather, storage |
Agriculture
| Commodity | Ticker | Driver |
|---|---|---|
| Corn | ZC | Weather, exports |
| Soybeans | ZS | China demand |
| Wheat | ZW | Weather, exports |
Trading Tips
Do
- Follow EIA reports (energy)
- Watch US dollar (inverse correlation)
- Use stops (high volatility)
- Understand supply/demand
Don’t
- Trade thin liquidity hours
- Ignore weather reports
- Hold over weekends (gaps)
- Over-leverage energy
Key Market Drivers
Gold
- Real interest rates (inverse)
- US dollar (inverse)
- Inflation (positive)
- Risk sentiment (positive)
Oil
- OPEC+ decisions
- US inventory levels
- Global demand
- Geopolitical events
Agriculture
- Weather patterns
- Crop reports
- Export demand
- Currency (US grain export)
Key Takeaways
- Unique drivers — Not correlated with stocks
- Diversification — Low correlation to equities
- Safe haven — Gold in uncertainty
- High volatility — Especially energy
- Seasonal patterns — Some predictable
Back to Markets Hub
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