What actually happens when you buy a commodity on the commodity trading market?
Before getting into the question I would like to share the difference between the cash market and trading market with a simple example, let us take our precious metal gold as our commodity, assume on February 10, 2017 you wanted to purchase gold and the market price was 22580 for 10 grams , you pay the market price and buy the gold on the same day(1.02.2017) on the market price, this is cash market or cash price, instead you do not want the gold on February 10, 2017 but you intend to buy gold for future say it one month , the gold smith offers you a price greater than market price i.e 22650 for 10 grams, you agree and after one month the price of the god may or may not increase or decrease. The time gap between this month creates a price fluctuations in the market through commodity trading. Commodity trading market is a place where you buy and sell the economic primary goods rather than a finished\physical products.
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