Concept:
A gerund is a verb form ending in “-ing” that functions as a noun.
Step 1: Identify the underlined word.
The underlined word is:
\[
\text{reading}
\]
Step 2: Check its function in the sentence.
In the sentence:
\[
\text{I like reading poetry.}
\]
the word “reading” acts as the object of the verb “like.”
Hence, it functions as a noun.
Step 3: Determine the grammatical category.
A verb ending in “-ing” used as a noun is called a:
\[
\text{Gerund}
\]
Step 4: Conclusion.
Therefore, the correct answer is:
\[
\boxed{\text{Gerund}}
\]