The physical commodity market also plays a crucial role in the swapping of goods owned by the residents of the a particular country.
How Commodity markets work?
Commodity markets just like any market, offers a place; tangible or in a virtual platform, whereby various commodities may be sold and purchased and the selling or buying of such products may take place in the present or in the future. Moreover, those investors, who are willing to indirectly invest in commodity markets, can engage in trading futures contracts of the related commodities.
Stock and Commodity markets relation
The commodity market has features in which it is negatively correlated with stock and bond markets. When the general price level of goods is increasing in an economy stock and bonds prices are likely to be on the low end. When inflation aspects arise, the price of commodities that change hands in the exchanges has a high tendency of rising.
While bond and stock prices move in the opposite direction to commodity prices during inflationary periods, investments in commodities, particularly precious metals and energy sources, often yield substantial returns for investors.
