Trading Commodities & Strategy

Commodity prices are mainly driven by supply and demand. However, other factors can affect this balance, including geopolitical tensions, the stage of the economic cycle, currency fluctuations (especially the US dollar, which is the main commodity pricing currency), and production disruptions caused by weather. Commodity traders use futures contracts, options, and other financial instruments to profit from price swings or to reduce market risks. Commodity trading may prove very profitable if you can recognize and follow the long-term commodity cycles.

A. Trading Commodities & Strategy

Commodity markets often move in cycles and usually have a high correlation with the US dollar but a low correlation with traditional assets like stocks and bonds. This makes them useful for portfolio diversification and protection against inflation. In addition, modern investment theories aim for a mix of portfolio positions to manage uncertainty, which makes commodities—especially gold—attractive for portfolios worldwide.

Commodity traders usually combine fundamental analysis with seasonal patterns and technical analysis to decide what and when to trade. Fundamentals indicate the market direction, while seasonal patterns and technical analysis help with timing entries and exits. Strict risk management is used to protect the main capital.

Table: Key Strategies for Trading Commodities

Read more: Introduction to Commodity Trading

 TRADING 📈 OIL MARKETS

Historically, crude oil prices have ranged widely between 30 and 150 U.S. dollars per barrel. The high leverage applied in derivative markets may partially explain the excessive short-term price swings.

Demand/Supply Highlights

• More than 1 million WTI contracts are traded daily on CME Group, with over 4 million contracts open at any time. This creates significant price pressure that is mostly separate from the actual physical demand for oil.

• OECD oil consumption is falling by 1.2% per year, while Asia—especially India—is driving 75% of global demand growth (India’s demand is increasing by 500,000 barrels per day each year).

• Key oil producers in 2025 are OPEC+ with 43%, the USA with 13%, and Russia with 11% of global oil production. Saudi Aramco is the world’s top producer, with 9.7 million barrels per day—making up 9.7% of total oil production.

📅 Crude Oil Yearly Pattern

As shown in the following chart, the first half of the year tends to be bullish for crude oil, while the second half is generally bearish. February, April, May, and June are statistically strong months, whereas October and November are typically weak.

Chart: Crude Oil Yearly Pattern (2000-2025)

📄 Research: Giorgos Protonotarios for TradingCenter.org

Read more: Information About Crude Oil Trading

A Historical Perspective on the Price of Gold

👉 J.P. Morgan said in 1912: "Gold is money, everything else is credit."

The total amount of gold available in the world today is about 156,000 tons. Each year, only 3,000 to 3,500 tons are mined. Most of this new supply goes to the jewelry industry, while the rest is used for investment. Since gold production is controlled and concentrated in a few countries, rising demand is often not matched by supply. Historically, gold was used as the world’s currency, and during financial crises, many investors view it as a “Safe Haven.” In such times, gold prices tend to rise sharply without any pauses or corrections. Investor psychology plays a key role in gold price movements, often outweighing the basic rules of supply and demand. In 2009, during the financial crisis, demand for gold dropped by 32%, yet prices still rose significantly.

Fundamental Highlights

• 208,000 metric tons of Gold is the total quantity that was ever mined (until 2024)
• Jewelry has used 95,000 tons, Central Banks 35,000 tons, Investment (bars, coins, etc.) 50,000 tons, and 30,000 went to manufacturing (electronics, space, etc.)
• Around 3,000–3,500 metric tons of Gold are mined per year (Top producing countries include China, Russia, Australia, Canada, and the U.S.)
• 25% of the new gold supply comes from recycling

📅 Gold Price Yearly Pattern

January is the best-performing month for gold, with April, July, August, and November also showing strong performance. Conversely, June is by far the worst month to hold gold. The chart below presents gold's annual trading pattern, based on market data from 2002 to 2025.

Chart: Gold Price Yearly Pattern (based on 23 years of data -2002-2025)

📄 Research: Giorgos Protonotarios for TradingCenter.org

Read more: Historical Perspective on Gold Prices