In plain English
What Commodity CFD means
Commodity CFDs let a trader speculate on the price movement of a commodity benchmark or quoted market price. The trade is usually cash-settled, and gains or losses are based on the price change, contract size, and spread. The underlying may be a spot-like price reference or a futures-based price reference, depending on the broker’s product design.
Why it matters
Commodity CFDs can behave differently from spot commodities or exchange-traded futures because the pricing reference, rollover method, and financing costs may all affect the result. Understanding the underlying reference matters for comparing quotes and for knowing whether the CFD is tied to a cash index, a futures contract, or another benchmark.
Example
If a gold CFD rises from 2,300 to 2,315 and the contract size is 1 troy ounce per point, the simplified gross gain on a long position is 15 currency units before spread and financing. This is an illustrative example only.
Quick answers
Common questions
Does a commodity CFD involve delivery of oil or gold?+
Usually no. It is normally cash-settled rather than physically delivered.
Why can commodity CFD prices differ from futures prices?+
Because the CFD may use a different reference price, include spread, or roll financing differently.
Sources