Real assets
Commodity markets
Commodities are physical markets with financial overlays. Oil, copper, gold and wheat have producers, inventories and delivery locations. Most investors never go near a barrel or a bushel. They use futures, funds or CFDs, and each of those is a financial position with its own cost of holding.
Physical market, paper market
A commodity futures contract specifies a quantity, a quality and a delivery point. Most contracts are closed before delivery. The possibility of delivery is what ties the futures price to the physical market. A CFD on “oil” has no delivery and no warehouse. It tracks a price the broker defines, often a futures price, and it can diverge in the way the broker’s terms allow.
The groups behave differently
Energy is sensitive to inventories, weather, geopolitics and refining. Industrial metals track construction, manufacturing and mine supply, which does not turn on quickly. Gold is held as a financial asset as well as a material, so real rates and the dollar often matter more than jewellery demand in the short run. Agriculture adds seasons and biology. A single “commodities are inflation hedges” sentence flattens all of that and has been wrong for long stretches.
How access works
- Exchange-traded futures, which require margin and an understanding of expiry.
- Options on those futures.
- ETFs and notes that hold futures or, in some metal funds, allocated metal.
- Mining or energy equities, which add company risk on top of the commodity.
- CFDs and spread bets, which are contracts with a firm.
Questions readers ask
Why do commodity funds sometimes fall while the headline price rises?
Futures funds roll from one contract to the next. If the later contract is more expensive, the roll can be a cost. The spot story and the investor’s return are different series.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- CME Group — checked 2026-10-13
- Bank for International Settlements — checked 2026-10-13