The key difference between spot trading and futures trading in commodities lies in the delivery and settlement of the trade. In spot trading, commodities are bought and sold for immediate delivery, with transactions settled "on the spot" (usually within 1-2 business days) at the current market price. This method is commonly used by manufacturers, wholesalers, and retailers who need physical goods quickly. For example, a jeweller purchasing gold at today’s price for immediate use engages in spot trading.

In contrast, futures trading involves contracts to buy or sell a commodity at a predetermined price on a future date. These standardised contracts are traded on exchanges, such as MCX or CBOT, and are often used for hedging against price volatility or speculation. Unlike spot trading, futures do not require immediate physical delivery; most traders close their positions before expiry or roll them over. Futures also involve leverage, allowing traders to control large positions with a small margin, which increases both profit potential and risk.

While spot trading is straightforward and tied to real-time demand, futures provide flexibility and risk management tools but carry higher complexity and potential for significant gains or losses. Both methods serve different purposes, with spot trading focusing on immediate supply needs and futures catering to price speculation and hedging strategies.