What is Comex & How Does Comex Work?

what is commodity exchange market

There are three primary gold trading hubs globally: London, Shanghai, and New York. London’s OTC Loco London market boasts a rich history and stands as the most actively traded market for precious metals worldwide.

In China, the Shanghai Gold Exchange (SGE) and the Shanghai Futures Exchange (SHFE) have recently gained prominence, now leading in spot gold and gold futures trading volume in Asia. Meanwhile, New York hosts COMEX.

COMEX, or The Commodity Exchange Inc., is the premier global market for futures and options trading in metals such as gold, silver, platinum, and aluminium. This article explores ‘What is COMEX?’, delving into the history of COMEX, its operational mechanisms, the specifics of COMEX Deliverable bars, and providing answers to common questions.

What is Comex?

COMEX specializes in trading futures for metals such as gold, silver, copper, aluminium, platinum, steel, and palladium. Acting as a clearing house, it facilitates trading these futures in standardized contract sizes, as well as mini and micro versions.

Among the three major global trading centres, COMEX boasts the highest trading volumes for gold futures, with over 400,000 futures and options contracts executed daily.

This extensive activity makes it the most liquid metal exchange worldwide. Due to its significant size and influence, the prices and daily activities on COMEX have a profound impact on global precious metals markets.

History of Comex Trading?

COMEX was established in 1933 through the merger of four New York-based exchanges: the National Raw Silk Exchange, the National Metal Exchange, the New York Hide Exchange, and the Rubber Exchange of New York.

Gold futures trading on COMEX began in 1982. In 1994, Commodity Exchange Inc. merged with the New York Mercantile Exchange (NYMEX), forming the largest physical futures trading exchange in the world.

Currently, both COMEX and NYMEX function as subsidiaries of the Chicago Mercantile Exchange (CME Group), one of the largest derivatives exchanges globally. Although COMEX is headquartered in the United States, it facilitates global trading, allowing traders from around the world to buy and sell metals.

With virtual trading available 24/7, COMEX trading provides continuous market access regardless of time zone, solidifying its reputation as one of the most prominent and widely recognized exchanges worldwide.

What is Commodity Exchange?

A commodities exchange is a legal entity that establishes and enforces rules and procedures for trading standardized commodity contracts and related investment products. It also refers to the physical location where such trading occurs.

The commodities market is immense, with a nominal value estimated at around $131 trillion in 2024. In practice, traders seldom deliver physical commodities through a commodities exchange.

Instead, they engage in futures contracts, agreeing to buy or sell a specified quantity of the commodity at a predetermined price, irrespective of the current market price, on a set expiration date. Wondering what is commodity exchange market? It’s a central location where things like oil and wheat are bought and sold, often for future delivery.

How Does COMEX Work?

At its core, COMEX functions as a marketplace where two types of traders—long and short—can engage in activities such as speculation or hedging within specific commodities markets. Rather than physically exchanging metals, most transactions on COMEX occur in paper form through futures contracts.

These contracts have a set expiration date, typically monthly, after which they can be rolled over to the next month if desired. Rolling over a contract involves closing the current contract, realizing any profit or loss, and opening a new contract for the following month.

Investors in COMEX futures contracts only need to deposit a fraction of the contract’s total value, known as a margin, to participate. This provides leverage, allowing them to control a larger position with a smaller upfront investment.

For example, instead of purchasing 100 ounces of gold outright, which would cost approximately $238,300 at current prices, an investor might only need to deposit 15% of that amount, or $35,745, to gain exposure to the same amount of gold.

While most COMEX investors prefer to settle contracts financially, some opt for physical delivery of the metal itself. To do so, they must meet certain requirements, including posting additional margins by the First Position Date.

When an investor takes delivery, it signifies their intention to take ownership of the metal. This means the short seller must deliver the metal to the long contract holder.

COMEX facilitates smooth deliveries each month, and delivered metal is typically registered and remains within the COMEX system. Only registered bars, which have a warrant attached to them, can be delivered.

Tracking delivery data provides insight into the physical demand for different metals. Taking delivery of physical metals incurs additional costs, such as storage fees and the requirement to post 100% of the contract value. Consequently, investors who choose physical delivery usually have a specific purpose in mind.

Wondering how gold prices are set globally? Look into “what is COMEX trading” to learn about the world’s biggest metals exchange.

what is commodity exchange

What are COMEX Deliverable Bars?

COMEX Deliverable bars, also known as COMEX Acceptable bars, are produced by approved refineries that adhere to strict purity, weight, and size standards set by the exchange. Investors who request delivery on COMEX receive a Deliverable bar. Key characteristics of these bars include:


Each bar must come with an assay certificate that verifies its purity. This certificate must be issued by a COMEX-approved assayer who independently confirms the bar’s purity. The minimum purity requirement for gold bars is 995.


The sizes of COMEX Deliverable bars vary depending on the metal being traded. Specifications guide the dimensions of the bars, including length, width, and thickness, as well as the degree of ‘undercut’ (the slope on the sides of the bar).


COMEX Deliverable bars must include specific marks, such as a stamp indicating the metal’s purity and the year of production.

Serial number

Each bar must have a unique serial number for easy tracking and verification of individual bars.

Types of Commodities

A commodity is a basic good that is interchangeable with other commodities of the same type, commonly used in the production of goods and services. Here are some of the most traded commodities in the world:

Crude Oil

One of the world’s most crucial commodities, crude oil is a naturally occurring unrefined petroleum product. It is used to produce various products, including gasoline and petrochemicals. In the U.S., crude oil prices are typically based on NYMEX futures prices.


Gold is one of the most widely traded precious metals globally. While investors can buy and sell the physical metal, traders usually engage in gold futures contracts on commodities exchanges. These contracts are generally sized at 100 troy ounces and priced in U.S. dollars per troy ounce.


This industry produces two main types of products: softwood and hardwood. Softwood is primarily used in construction, while hardwood is used in flooring, furniture construction, and making panels and cabinets.

Natural Gas

Used to heat homes and generate electricity, natural gas also has numerous commercial and industrial applications. Natural gas contracts are sold in units of 10,000 million British thermal units (mmBtu) and traded in U.S. dollars per mmBtu.


As the most widely used fibre in the world, cotton is processed into yarn and other textiles for clothing and household goods. Cotton contracts are sized at 50,000 pounds and traded in U.S. dollars per pound. The last trading day for cotton is 17 business days from the end of the spot month.

If you’re interested in futures contracts for metals like copper and aluminium, researching what is COMEX trading will be a helpful starting point.


Commodities exchanges are marketplaces where trading occurs for physical goods, known as commodities. The prices of these commodities can significantly influence market movements, especially heavily traded ones like oil and gold. While other commodities, such as food, may not dictate overall market direction, they can have a substantial impact on consumer pricing and sentiment.

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