Latest Commodities News & Reports

gold

Gold Prices Edge Lower, Dollar Reservations Limit Selling Pressure

Gold prices moved lower on Tuesday, although overall selling pressure has been limited given the dollar’s inability to make more than very limited headway.Dollar...
crude oil storage

Choppy Trading In Crude Oil Prices, Dollar Recovery Caps Gains

A lack of liquidity has contributed to volatile trading in oil with limited a retreat from best levels triggered in part by a measured...
silver prices bullion

Silver Prices See Limited Upside Amid Dollar Rebound

Silver prices edged slightly lower in narrow trading on Tuesday, as the U.S. dollar rebounded and a semblance of calm returned to the financial...
zinc

Zinc Prices: Rally Continues to Gain Steam

Zinc prices continue to rally and climbed to their highest in about a decade Monday as traders build on their positions following the International...
steel prices

As Steel Prices Rally, Product Price Hikes Spread

Steel prices continue to rally, and as a result, Japan's top electric-arc furnace steelmaker said on Monday that it will raise its product prices...
baltic dry index

Baltic Dry Index Adds 6 Points, Large Vessel Strength Supports

The Baltic Dry Index posted another gain on Monday, this time adding a modest 6 points to reach 1266. Pushing the BDI higher was...
gold

Gold Prices Maintain Firm Tone, Dollar Retreat Underpins Support

Gold prices weakened sharply later in US trading on Friday, although there were net gains on Monday as the dollar came under renewed pressure.After...
Silver

Silver Prices Edge Higher in Narrow Trade

Silver prices traded higher on Monday, as risk aversion continued to prop up precious metals after a volatile week.Silver futures for September delivery rose...
oil storage tanks

Crude Oil Prices Sustain Gains, Long Positions Scaled Back

A fragile dollar has continued to provide net support to crude oil prices with markets also more confident surrounding underlying fundamentals after the sustained...
crude oil
gold
silver
copper
natural gas
steel

Commodities are raw materials intended for use or consumption. There are three main commodity classifications: Agriculture commodities (often referred to as soft commodities), energy commodities, and metal commodities (referred to as hard commodities).

The most commonly traded commodities are crude oil, gold, silver, and copper.

How Are Commodities Traded?

Commodity markets can include physical delivery, referred to as a spot contract. Most trades, however, are carried out through derivative trading using futures, forwards, CFD’s, and options.

  • Futures contracts are carried out through regulated commodity exchanges. There are a number of international commodity exchanges; the world’s largest futures exchange is the Chicago Mercantile Exchange (CME). Other notable exchanges include the New York Mercantile Exchange, and the London Metal Exchange.

Futures contracts have been the most popular method of trading commodities. The introduction of CFD’s in the late 1990s popularized commodity trading as the usage of leverage was permitted.

  • CFD’s are now offered by most brokers, including brokers that focus primarily on currency trading. While the range of products offered on CFD trading varies from one broker to another, at a minimum, most will offer to trade in crude oil, gold, and silver.
  • Forward contracts introduce the element of time into the equation. The method has been commonly used in agricultural trading, to avoid fluctuations in price ahead of harvesting a crop. The forward contract would allow farmers to set the price on their crops in advance, eliminating risk as a result of price fluctuations. Trading on forward contracts has expanded outside of its original intended use, and contracts are now traded for speculative purposes in a broad range of commodities.

What are Commodities Correlated With?

As the US dollar is the largest traded currency in the world, there is a loose inverse correlation between the value of the dollar and commodity assets.

While the US dollar carries a correlation with the broader commodity market, individual currencies tend to have correlations with individual commodities. In the currency markets, resource-driven economies are referred to as commodity currencies. New Zealand, for example, relies heavily on their dairy trade exports, and therefore fluctuations in dairy prices stand to affect their economy, and as a result, stand to impact their currency. In Australia, copper exports have created a link between their currency and the commodity. Canada produces oil, and their currency carries a strong correlation with oil prices.

Metals have been defined as safe haven assets. During periods of market uncertainty, or what is commonly known as risk aversion, gold prices tend to go up. Risk sentiment shifts in the global financial markets are not the only influence on gold; the precious metal is also bought as a hedge during extended times of low inflation.

Factors That Affect Commodity Markets

In its most general form, supply and demand drive commodity markets. Individual commodity classifications and individual commodities are driven by different influences. Oil, for example, is sensitive to decisions made by the Organization of the Petroleum Exporting Countries (OPEC). Gold prices are influenced by risk sentiment and global inflation levels. The price of gold then influences other commodities under the metals umbrella.

Agricultural commodities are affected by seasonality patterns that can be related to weather conditions, which consequently affect supply. Global events and natural disasters can impact the commodity market, as an example, a hurricane in an agricultural-driven economy would simultaneously increase demand for gold while suppressing prices in agriculture commodities.

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Euro Dollar EUR/USD

EUR/USD Fails To Hold Above 1.1800, Caution Ahead Of Draghi

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canada flag

Canadian June Retail Sales Rose 0.1%, Underlying Sales Gain 0.7%

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Japan Currency US Dollar USD/JPY

USD/JPY Recovers Ground, Rebound In Risk Appetite Curbs Yen Support

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UK Currency - GBP

GBP/USD Slides To 6-Week Lows, Yield Support Remains Lacking

In the short term, Sterling is likely to be dependent on support from valuation grounds given a lack of yield support and lack of...
UK

UK July Government Borrowing Surplus Of £0.2bn, Interest Payments Increase

The UK government reported a public-sector borrowing surplus, excluding public-sector banks, of £0.2bn for July from a deficit of £0.3bn the previous year and...