Commodities as an asset class
Commodities are raw materials — metals, energy and agricultural produce — traded on exchanges. In India they trade mainly on the MCX (Multi Commodity Exchange). They behave differently from equities and are driven by real-world supply and demand.
PCJ is a member of MCX, so commodities can be traded alongside equities from one account. This page explains how the market works — it is not a view on any commodity's price.
The main commodity groups
- Bullion — gold and silver; often watched as stores of value and inflation hedges.
- Energy — crude oil and natural gas; driven by global supply, OPEC decisions, inventories and demand cycles.
- Base metals — copper, aluminium, zinc, lead, nickel; tied to industrial and construction demand.
- Agri commodities — driven by weather, sowing, harvests and government policy.
How the MCX works
- Lot size & tick — each contract is a fixed quantity (e.g. a gold or crude lot); price moves in a minimum tick.
- Expiry — contracts have monthly expiries; you close or roll before then.
- Delivery vs cash — some contracts are deliverable, others cash-settled; know which before expiry.
- Trading hours — commodity hours run later than equities (into the evening), tracking global markets.
Why commodities move differently
Commodities are cyclical and sensitive to macro forces — the US dollar, global growth, geopolitics and storage costs. This makes them a diversifier: they don't always move with equities. It also makes them volatile, and most MCX contracts are leveraged futures.
Key terms
MCX
Multi Commodity Exchange of India — the main commodity derivatives exchange.
Contango / backwardation
Futures trading above (contango) or below (backwardation) spot — informative in commodities about supply and storage.
Hedging
A producer or consumer locking in a price to protect against adverse moves — commodities' original purpose.
Spread
Trading the price difference between two contracts (e.g. two months, or two related metals).
Test yourself
1. Gold prices are most commonly linked to…
Bullion is watched against real rates and the dollar.
2. MCX contracts are traded in…
Commodity futures trade in standardised lots.
3. Commodities can diversify a portfolio because…
Low correlation with equities is what makes them a diversifier — not a guarantee of gains.
FAQs
Yes — PCJ is a member of MCX, so commodities can be traded alongside equities. This page explains how the market works; PCJ does not provide commodity tips, targets or advice.
Most MCX commodity contracts are leveraged futures, and prices can gap on overnight global news, so they can be more volatile than delivery equity. Their low correlation with equities can help diversification, but leverage must be managed carefully.
Broadly: global supply (including OPEC decisions), inventory levels, demand cycles and geopolitics. Understanding these drivers is the educational goal — not predicting the next move.
No. Gold is often watched as a store of value and is influenced by real interest rates and the dollar, but it has no guaranteed relationship with inflation and can fall for long periods.
Educational content for general awareness only — not investment, trading or tax advice, and not a recommendation to buy or sell any security. PCJ Holdings does not provide research or advisory services. Examples and calculator outputs are hypothetical and illustrative. Investments in securities markets are subject to market risks; read all related documents carefully. Figures are indicative for FY 2025-26 and may change.