Online Calculator | CFD Trading Commodities – What Drives Commodity Prices?

CFD Trading Commodities – What Drives Commodity Prices?

CFD trading can be a great way of taking a position on the financial markets.

With a vast array of markets available from one digital platform accessed via your browser or your mobile and the promise of increased leverage it’s easy to see why its popularity has increased in recent years.

One of the core markets you can trade CFDs on is commodities. All commodities have a unique weighting of factors which will influence its price.

But it is the extent to which these factors influence an individual commodity that investors and analysts pay special attention to

For instance, the price of Gold and the US dollar are very closely linked, as many investors use the relative stability of the former to hedge against a weakness in the price of the latter.

The price of copper is more susceptible to changes in the cycle of supply and demand in business whereas the price of platinum tends to rise in more stable economic times due to its specialist use in manufacturing.

When copper prices rise the share prices of certain mining firms can rise too, such as Rio Tinto. The direction of the UK’s FTSE 100 index is influenced too, because of the influence of the combined market capitalisation of those companies in the mining sector within the index.

Governmental trade policies play a major part in defining the price of sugar, but, as sugar is a crop ­- either sugar beets or sugarcane ­- the weather plays a part too, which makes them a little harder to predict and that’s why investors, and indeed buyers of this commodity, need to keep a close eye on developments.

In conclusion, the commodity markets can change quickly and for a variety of reasons.

You can find out more about commodities and the financial markets with IG Markets, one of the UK’s leading CFD providers: www.igmarkets.co.uk

You can trade a range of markets from commodities to forex to shares.

Remember that CFD trading is a leveraged product and can result in losses that exceed your initial deposit.

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