Commodities Market Today 26 March

Listen to our Podcast: Grow your wealth and keep it secure.

0:00 / 0:00

Overview

Welcome to our exploration of the commodities market today. In this section, we embark on a journey to uncover the essence of commodities trading, its various types, the enticing benefits it offers, practical insights into how to engage in it, and crucial factors and risks to consider along the way.

Understanding Commodities Trading: Types and Essentials

Commodities trading involves the buying and selling of raw materials or primary agricultural products, typically traded on dedicated exchanges. Broadly categorised into two types:

  • Hard Commodities: These include natural resources such as gold, silver, crude oil, and agricultural products like wheat, corn, and soybeans.
  • Soft Commodities: Soft commodities encompass goods that are grown rather than extracted, such as coffee, sugar, cotton, and cocoa.

Why Engage in Commodities Trading: Exploring the Benefits

Commodities trading offers a plethora of benefits for investors and traders alike:

  • Portfolio Diversification: Commodities provide an additional asset class to diversify portfolios, reducing overall risk exposure.
  • Inflation Hedge: Certain commodities, like gold and oil, historically act as a hedge against inflation, preserving purchasing power during economic uncertainties.
  • Potential for Profit: Fluctuations in commodity prices present opportunities for traders to profit from price movements through strategic trading strategies.
  • Global Demand: Commodities cater to global demand, driven by factors such as population growth, urbanisation, and geopolitical developments, offering ample trading opportunities.

How to Engage in Commodities Trading: Practical Insights

Entering the world of commodities trading requires understanding and implementing certain key strategies:

  • Research and Analysis: Conduct thorough research and analysis of market trends, supply-demand dynamics, geopolitical factors, and macroeconomic indicators influencing commodity prices.
  • Selecting a Trading Platform: Choose a reputable trading platform that offers access to a wide range of commodities markets, advanced trading tools, and real-time data.
  • Risk Management: Implement risk management strategies such as setting stop-loss orders, diversifying your portfolio, and avoiding over-leveraging to mitigate potential losses.
  • Stay Informed: Stay updated with the latest news, market developments, and regulatory changes impacting commodity markets to make informed trading decisions.

Factors and Risks to Keep in Mind

While commodities trading offers lucrative opportunities, it also entails certain risks and considerations:

  • Price Volatility: Commodities markets are inherently volatile, subject to sudden price fluctuations driven by factors like weather conditions, geopolitical tensions, and economic indicators.
  • Leverage Risk: Trading on margin amplifies both potential profits and losses, exposing traders to higher levels of risk.
  • Market Liquidity: Some commodities may have lower liquidity, leading to wider bid-ask spreads and potential difficulties in executing trades at desired prices.
  • Regulatory Risks: Changes in government regulations, trade policies, or geopolitical developments can significantly impact commodity markets, affecting supply chains and prices.

Navigating the commodities market requires a blend of market knowledge, risk management skills, and strategic decision-making. By understanding the fundamentals, leveraging advanced trading tools, and staying informed, traders can capitalise on opportunities while managing risks effectively.

Top News and Events

  • Gold prices surged to a record high last week following indications from Fed policymakers regarding anticipated interest rate reductions despite recent inflationary pressures.
  • Spot gold prices reached $2,175.68, with silver also climbing to $24.71, driven by expectations of rate cuts and uncertainties surrounding inflation, jobless claims, and potential future gold levels.
  • Brent crude oil approached $86 per barrel due to escalating tensions between Russia and Ukraine, with U.S. crude reaching $81.09. Both benchmarks surged by 11% and 12.5%, respectively, amidst concerns over global oil supply disruptions.
  • Gold has seen a remarkable 11% increase in returns during FY2024, outperforming inflation by almost twice its rate. Conversely, silver's returns over the same period remained modest at 3.2%.
  • Meme coins, inspired by internet memes, have gained popularity in the crypto world, leveraging humour and virality rather than traditional utility or technology.
  • Despite a tumultuous week, gold managed to maintain gains, albeit falling around 0.80% lower on Friday due to a rally in the U.S. dollar. Decreased yields on 10-year U.S. bonds also influenced market sentiment.

Prices of Popular Commodities

The day’s rate of Gold, Silver, Natural Gas, Crude Oil (Brent), Crude Oil (WTI)

NameLTPChangeChange %
GOLD65,906.00-116.00-0.18
SILVER74,714.00-209.00-0.28
COPPER753.65-3.15-0.42
CRUDEOIL6,828.004.000.06
NATURALGAS151.200.30-0.20

Note : Stats/Prices updated as on 26 March, 2024 at 09:26 AM

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here:https://bit.ly/3Tcsfuc

Share this article: 

Frequently Asked Questions

What are the potential risks associated with commodities trading?

Answer Field

Risks include price volatility, leverage risk, liquidity risk, regulatory risk, geopolitical risk, and risks specific to individual commodities such as weather-related risks for agricultural commodities or geopolitical tensions for energy commodities.

Are there any specific regulations governing commodities trading?

Answer Field

Yes, commodities trading is subject to regulations imposed by regulatory authorities such as the Commodities Futures Trading Commission (CFTC) in the United States and similar bodies in other jurisdictions. These regulations aim to ensure fair and transparent trading practices.

How can I manage risk when trading commodities?

Answer Field

Implement risk management techniques such as setting stop-loss orders, diversifying your portfolio, avoiding over-leveraging, and staying informed about market developments and news that may impact commodity prices.

What are some common trading strategies in commodities markets

Answer Field

Popular strategies include trend following, range trading, spread trading, and fundamental analysis-based approaches. Each strategy has its own set of rules and techniques suited to different market conditions.

What is leverage in commodities trading, and how does it work?

Answer Field

Leverage allows traders to control a larger position with a smaller amount of capital, amplifying both potential profits and losses. While leverage can magnify returns, it also increases risk, so it's crucial to use it judiciously.

How do I choose which commodities to trade?

Answer Field

Consider factors such as market trends, supply-demand dynamics, geopolitical developments, and your risk tolerance when selecting commodities to trade. Conduct thorough research and analysis to identify opportunities.

Can I trade commodities without owning the physical assets?

Answer Field

Yes, through derivatives such as futures contracts and options, traders can speculate on commodity price movements without owning the physical assets, enabling participation in commodities markets with lower capital requirements.

What are the main benefits of commodities trading?

Answer Field

Commodities trading offers portfolio diversification, a hedge against inflation, potential for profit from price fluctuations, and exposure to global demand trends.

How does commodities trading differ from stock trading?

Answer Field

While stock trading involves buying and selling shares of publicly traded companies, commodities trading deals with the exchange of physical goods or raw materials. Additionally, commodities are often subject to supply and demand dynamics rather than company performance.

What exactly are commodities?

Answer Field

Commodities are raw materials or primary agricultural products traded on dedicated exchanges. They can be categorised as hard commodities (e.g., gold, oil) or soft commodities (e.g., coffee, cotton).

No Result Found

Read More Blogs

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking Mobile App for effortless investing and trading

Bajaj Broking App Download

6.5 Lac+ Users

icon-with-text

4.1 App Rating

icon-with-text

4 Languages

icon-with-text

₹ 3500 Cr MTF Book

icon-with-text