Commodity
Instruments
A commodity is a raw physical good such as gold, oil, or wheat that can be traded via CFDs, futures, or spot markets.
What is a commodity?
A commodity is a basic, physical raw material that is largely interchangeable with other units of the same type, regardless of who produced it — one barrel of a given crude oil grade is treated much like another. Commodities are typically grouped into a few broad categories:
- Precious metals — gold, silver, platinum
- Energy — crude oil, natural gas
- Agriculture (softs) — wheat, corn, coffee, sugar, cotton
- Industrial metals — copper, aluminum
How commodities are traded
Very few retail traders take physical delivery of a commodity. Instead, most trade commodities through a futures contract on a regulated exchange, a CFD offered by a broker, or, for some metals, a spot market price. Each route offers exposure to the commodity’s price movement without the logistics of storing barrels of oil or bushels of wheat.
What drives commodity prices
Commodity prices are heavily influenced by the balance of supply and demand: weather affecting a harvest, OPEC+ production decisions for oil, mine output for metals, and shifts in industrial or consumer demand. Currency strength also matters, since most major commodities are priced in US dollars — a weaker dollar tends to support commodity prices, and vice versa. Geopolitical events, from conflicts to trade disputes, can also cause sharp, fast moves.
Why traders follow commodities
Commodities give traders exposure to the physical, “real economy” side of markets and can behave very differently from currencies or stocks, which makes them useful for diversification. Gold in particular is closely watched as a safe-haven asset during market stress — see our dedicated entries on gold trading and oil trading for more on the two most actively traded commodities.
Quick recap
- A commodity is a standardized raw material like gold, oil, or wheat.
- Retail traders usually access commodities via futures, CFDs, or spot pricing, not physical delivery.
- Prices are driven by supply/demand, the US dollar, and geopolitical events.
- Gold and oil are the most widely traded commodities among retail traders.