Challenges of Trading Commodities CFDs in 2020

The first quarter of the year had just ended, and we’ve had one of the most volatile periods in the commodities market. A lot of challenges lie ahead and market participants have been pricing in the worst outcomes since the 2008 financial crisis. In our article, we want to focus mainly on oil and gold, simply because traders are extremely active these days. If you want to build an optimal CFD portfolio or if you just want to improve your trading, stay tuned to find more about the most traded commodities.

Oil Trading

It’s a fact that oil demand was expected to drop this year, as economies are now shut down in order to prevent the spread of COVID-19. However, a “one-two punch” situation occurred, after OPEC+ failed to reach an agreement in order to cut the oil production. Oil CFDs slumped towards the $20 area and despite a recent rebound, the price remains well-below the breakeven point for Western oil-producing companies.

Based on the latest developments, a globally coordinated production cut of 10-15 million barrels per day could be under negotiations, but bringing US companies to the deal will be a great challenge from a legal point of view. Failure to reach such an agreement will put new pressure on oil, but even if it materializes, economists predict it won’t be enough to counteract the damages done with the economic slowdown.

Gold Trading

Moving ahead to Gold CFDs, the precious metal is in a difficult position right now. On one hand, we have investors willing to invest in Gold as a protection against rising inflation expectations and economic uncertainty, and on the other, we have looming risks of countries starting to sell some of their gold in order to finance fiscal deficits. Russia had already announced such a move and other emerging countries could follow through, given the US dollar shortage that will continue to unfold.

Considering 2020 will be a time of economic crisis, Gold could underperform, as it did during 2008-2009. Until economic uncertainty will peak, we expect gold to be trade sideways or in the negative, although some traders view that as weird.


Both gold and oil will remain volatile instruments in the months ahead. That will mean a lot of trading opportunities will show up but traders will need to know how to exploit volatility with CFDs. This could be your wildest trading ride, so make sure you are well informed and prepared.

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