Definition
Commodity futures are contracts to buy or sell a commodity at a fixed price on a future date. These contracts are traded on commodity exchanges and are used for both investment and risk management.
Example
A trader agrees to buy gold at Rs 60,000 per 10 grams after one month. If the price of gold rises to Rs 62,000, the trader can make a profit. If the price falls, the trader may face a loss.
Caution
Commodity futures involve high risk because prices can change quickly. They also use leverage, which can increase both profits and losses. Investors should understand the risks before trading.