Trade Gold, Silver and Oil on the market-leading MT4 or MT5 platforms.
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What is Commodities Trading?
The trading of commodities includes a vast array of products that are mainly traded on global futures exchanges. The world economy is dependant on various commodities to varying degrees. Complex factors drive the supply and demand for energy, metals, and agricultural commodities. This can lead to large price swings as markets attempt to find the price at which supply and demand are balanced.
For traders there are opportunities to trade commodities across all time frames, from minutes to years. Commodity prices tend to establish persistent trends that can last from 5 to 10 years. However, supply and demand can be influenced by weather, geo-political factors, inflation, interest rates, consumer spending and economic conditions. This means new trading opportunities can arise at any time.
Trading Oil: Brent & WTI
The oil market is diverse with various prices quoted for crude oil depending on the location, quality and properties. The most commonly traded oil contracts
are Brent (Brent Sweet Light Crude) and WTI (West Texas Intermediate), which are the two global benchmarks for oil trading –
very few traders look at any other oil prices.
Brent crude is extracted from the North Sea, while WTI is extracted in North America. WTI is a better product for producing diesel fuel, while Brent is superior for producing gasoline. However, there are other factors that determine the prices of the two benchmarks. Oil costs money to transport,
so the location of demand is an important factor, as is the amount of production, and the availability of storage facilities.
For many years the prices of the two were only a few dollars apart, however, over the last decade,
Brent has surged ahead and now trades $5-$10 higher than WTI.
Trading Metals: Gold & Silver
Gold and Silver offer traders opportunities to profit from both increasing risk aversion in global markets, and speculation around inflation. Both are real assets, with limited supply, meaning they offer a real store of value during times of uncertainty and inflation.
Many of the factors that influence the price of Gold and Silver are the same, however, there are also a few differences. Precious metal prices are influenced by investor appetite for risky assets (including bonds, stocks and commodities), geo-political events, expected inflation and interest rates and the strength of the US Dollar. The dynamics of the mining industry also influence prices.
However, while all the Gold that has been mined still exists, Silver is actually used in industrial processes. It was used in the past for photography and printing and is now used by the solar power industry. This means the total supply of Silver is gradually falling, which may provide an underpin to the price.