Trade commodities with CFDs

To trade commodities with CFDs, you’ll first of all need to learn how commodity CFDs work. Then, you can open a CFD account and use it to buy and sell oil, gold, silver and more.

Commodity CFDs work using contracts that track the live prices of commodity markets. Buying or selling one of these contracts is equivalent to trading a standard amount of the underlying commodity it tracks – and gives you the same exposure as trading the commodity in the open market.

However, you’ll never actually own the commodity or future that you’re trading, so you don’t need to worry about taking delivery or storage.

A City Index account enables you to trade our full range of commodity markets alongside indices, shares, forex and more. Open your trading account here.

As with any financial market, commodity prices are driven by the laws of supply and demand. However, each commodity is different. The supply of oil is very different to that of gold, for example.

Oil is drilled around the world, then refined and transported in tankers, oil pipelines and more. Global supply can be fragile, with natural disasters or international conflict often seeing its price spike.

Demand, meanwhile, is driven by world industry. When the economy is growing, oil demand tends to rise. When the economy stalls, oil’s price might fall.

Gold is mined around the world, but unlike oil is very rarely consumed – so gold supply is constantly rising. Overall, the precious metal’s supply is less fragile than that of energy markets.

Its demand picture, too, is unique. Gold is prized for its ability to hold value and is stored by lots of central banks around the world. When volatility peaks, investors may try to buy gold as a ‘safe haven’, causing its price to rise.

Learn more about what drives gold and oil prices.

The most-traded commodities tend to be gold, silver and oil. Gold is often used by traders as a hedge against volatility, as it’s seen to hold its value when other markets go awry. And as the resource that powers the global economy, oil markets can see some powerful volatility.

Here are the five top-traded commodity markets on the City Index platform:

1. Gold
2. Silver
3. US crude oil
4. UK crude oil
5. Carbon emissions

Which way will they head next? Log in to take your position.