Best Commodity Brokers in 2025

Which raw materials can be traded online?

Commodities play a fundamental role in both the global economy and modern financial markets. In trading, “commodities” refer to raw materials that are used to produce goods or energy, and which are often traded on financial markets via standardized contracts. The main categories are energy (oil, gas), metals (gold, silver, copper, aluminium), and agricultural products (wheat, corn, soy), each with unique economic dynamics.

Their value is strongly influenced by supply and demand, which can be impacted by geopolitical events, weather conditions, production cycles, and technological advances. For example, a disruption in oil supply or poor crop yields can cause prices to fluctuate sharply. Trading these assets offers portfolio diversification, but comes with specific risks, such as volatility due to external shocks.

Several financial instruments are available for online investing:

• CFDs (Contracts for Difference): Allow traders to speculate on price movements without owning the physical commodity.
• Futures contracts: Standardized agreements to buy or sell a commodity at a predetermined price on a specific future date.
• ETFs (Exchange-Traded Funds): Funds that track the price of a commodity or a basket of commodities, suitable for longer-term and simplified exposure.

Below is a summary table of key commodities accessible to online traders.

Investing in Gold

Gold is considered a safe-haven asset, widely used by investors to protect their portfolios during uncertain times. Its value is relatively stable compared to other commodities, but can be influenced by inflation, currency fluctuations (especially USD), and global financial crises. Indian investors often access gold through ETFs or digital gold platforms, which reduce storage and purity concerns.

Investing in Brent Crude Oil

Brent crude is the reference price for oil in international markets. Oil prices fluctuate strongly in response to geopolitical events, OPEC decisions, and global economic outlooks. Due to its high volatility, oil trading suits dynamic investors seeking short- to mid-term opportunities. CFDs and futures allow leveraged positions, but carry higher risk.

Investing in Natural Gas

Natural gas shows pronounced price swings, often due to seasonal demand, weather variations, and storage levels. This commodity is best suited for sophisticated investors who can actively manage risks. In India, access is mainly via futures or ETFs, requiring close attention to market news and volatility.

Investing in Aluminium

Aluminium is a key industrial metal, closely linked to construction and automotive demand. Prices are affected by economic growth cycles, trade policies, and energy costs. It fits a diversified portfolio, offering exposure to manufacturing and industrial trends. Indian traders primarily use futures contracts available on leading stock exchanges.

Investing in Cereals (Wheat, Corn, Soy)

Agricultural commodities like wheat, corn, and soy provide diversification benefits and are sensitive to weather, global demand, and harvest cycles. Prices may spike in case of supply shocks. These products suit investors looking for diversification beyond traditional assets. Futures and ETFs are standard instruments, with some brokers offering commodity-specific funds.

By understanding each commodity’s market behavior and choosing the right investment tools, Indian investors can diversify their portfolios and manage risk effectively in online commodity trading.

How to invest in commodities?

Several methods are available for investing in commodities, each adapted to different investor profiles and time horizons. Whether you're seeking short-term, active opportunities or prefer stable, long-term holdings, commodities (such as metals, energy, or agricultural products) represent tangible assets accessible through a range of financial instruments. Below is an overview of the main ways to invest in commodities and how each method works.

Invest in Commodities via CFDs (Contracts for Difference)

CFDs (Contracts for Difference) are derivative products that allow you to speculate on the price movements of commodities without owning the underlying asset. With CFDs, you open a position based on whether you believe the price will go up or down. CFDs enable traders to use leverage, amplifying both potential gains and losses. This instrument is suitable for active traders looking for short-term results, but comes with high risk due to volatility and leverage.

Example: CFD Trade on Crude Oil

Suppose the price of Brent crude oil is $80 per barrel. If you believe the price will rise, you buy a CFD. If the price climbs to $85, you can close your position and profit from the $5 per barrel price increase (excluding fees and leverage effects). Conversely, if the price falls to $77, your loss will be calculated on the same principle.

Categories of Commodities & Example CFD Assets

Invest in Commodities via Futures Contracts

Futures are standardized contracts to buy or sell a specific quantity of a commodity at a predetermined price on a set future date. Widely used by both professional investors for hedging (risk management against price fluctuations) and speculators looking for profit opportunities, futures involve significant capital and are traded on regulated exchanges. They require a deep understanding of markets, contract specifications, and margin requirements.

Example: Wheat Futures Contract

Imagine wheat is trading at ₹2,100 per quintal. You enter into a futures contract to buy 10 quintals at this price, with delivery/settlement in three months. If, at expiry, the price rises to ₹2,200 per quintal, your position yields a gain of ₹1,000 (₹100 profit per quintal, 10 quintals), before fees.

Categories of Commodities & Available Futures

Invest in Commodities via ETFs (Exchange Traded Funds)

ETFs are investment funds traded on stock exchanges that track the price of a commodity or a basket of commodities. ETFs provide investors with diversified or targeted exposure, without physically holding the commodity or managing futures contracts. They represent a practical solution for those seeking liquidity, transparency, and ease of access—typically for medium to long-term investment strategies.

Example: Gold ETF Investment

You buy a Gold ETF listed on Indian exchanges, whose value closely follows the market price of gold. If gold moves from ₹60,000 per 10 grams to ₹62,000, your ETF investment should rise proportionally, minus management fees.

Categories & Examples of Commodity ETFs

Invest in Shares of Commodity-Related Companies

One indirect method to gain exposure to commodities is investing in companies engaged in extraction, processing, or distribution of these raw materials (such as miners or oil producers). The performance of these stocks is influenced both by commodity prices and by company-specific factors (management, cost controls, etc.), making this route different from direct commodity price exposure.

Example: Buying Shares in a Mining Company

You buy shares of an Indian mining company that produces zinc and copper. If commodity prices rise and the company performs well operationally, its share price might increase, offering capital appreciation and potentially dividends.

Sectors & Example Companies

Invest in Physical Commodities

The most traditional approach is buying physical commodities such as gold, silver, or agricultural products. This method appeals to investors seeking security and long-term wealth preservation against inflation or currency risk. However, costs and logistics related to storage, insurance, and authenticity must be considered.

Example: Buying Physical Gold

You decide to buy 50 grams of gold in coins or bars from a certified jeweler. At ₹61,000 per 10 grams, your investment is ₹305,000 (excluding any premiums/fees). You become the physical owner of the asset, responsible for its storage and safety.

Physically Accessible Commodities

By understanding the features, risks, and practicalities of each method, you can select the commodity investment approach that best fits your objectives and risk tolerance.

Which raw material suits your investor profile?

Investing in commodities offers opportunities—but it’s essential to know that not all commodities behave in the same way. Each asset comes with its own level of price volatility, potential returns, exposure to political events, and sensitivity to global demand and supply. Selecting the right commodity depends greatly on your experience in financial markets and your tolerance for risk. Here’s a simple guide to help you pick the most suitable commodities according to your investor profile.

🟢 Beginner: Stable and Predictable Commodities

For those new to commodities, it's best to focus on assets that are relatively stable and easy to understand. Here’s why gold and aluminum are recommended:

• Gold:
• Historically seen as a 'safe haven' asset, with lower price swings compared to other commodities.
• Widely used for portfolio diversification and protection against inflation.
• Less exposed to geopolitical events and supply shocks.
• Aluminum:
• Used in many industries, ensuring steady demand.
• Prices are typically less volatile compared to energy commodities.
• Global production and consumption patterns are well established.

• Favor investment through diversified ETFs or mutual funds for easy and lower-cost exposure.
• Consider CFDs (contracts for difference) with low leverage.
• Avoid day trading or high-frequency strategies to minimize risk.

🟡 Intermediate: More Dynamic, News-driven Instruments

If you already have some trading experience and are ready to take on assets sensitive to market events, oil and grains can be suitable options. These require an ability to track current affairs and react to price movements:

• Oil (crude, Brent, WTI):
• Prone to price swings due to geopolitical tensions, OPEC decisions, and economic reports.
• Requires understanding of supply/demand and global events.
• Grains (wheat, corn, soybeans, etc.):
• Influenced by global crop reports, weather patterns, and trade policies.
• May have seasonal patterns that create regular opportunities.

• Use swing trading or medium-term approaches with ETFs or CFDs to benefit from significant price moves.
• Always apply stop-loss orders to manage downward risk.
• Keep up with market news and economic releases for informed decision-making.

🔴 Expert: Highly Volatile, Externally Sensitive Assets

Moving into advanced territory means handling commodities with strong price swings and high sensitivity to external data. Natural gas, intraday oil trading, and short-term trading on grains belong here:

• Natural Gas:
• One of the most volatile energy commodities; rapid reactions to weather and storage data.
• Price movements can be extreme within hours or days.
• Oil (short-term/day trading):
• Requires strong market timing and reaction to breaking news, inventory numbers, and global events.
• Very high liquidity but also high risk.
• Grains (short-term trading):
• Spreads and price gaps can occur quickly following unexpected reports or weather events.
• Intraday moves often driven by news and forecasts.

• Use advanced trading tools like scalping (quick in-and-out trades), technical indicators, and real-time news alerts.
• Employ hedging techniques to manage exposure to sudden price moves.
• Practice strict risk and leverage management to protect your capital in high-volatility scenarios.

By aligning your commodity investments with your experience and risk appetite, you can approach this market more confidently and strategically. Start with stable assets, gain experience, and only then consider assets with higher complexity and risk.

How to choose a broker for trading commodities?

Choosing the right broker is a crucial first step when you want to trade commodities efficiently and securely. A well-selected broker can provide you access to global markets, competitive trading fees, robust trading platforms, and essential fund protections—everything you need to focus on your strategies without worry. For investors based in India, knowing how to compare and analyse brokers will help you avoid common pitfalls and optimise your investment experience.

By carefully considering each of these factors, you can select a commodity broker that aligns with your investment objectives while ensuring safety, cost-efficiency, and a seamless trading experience in the Indian market.

Why invest in commodities?

Why consider commodities in a diversified portfolio? For many investors accustomed to stocks and bonds, including commodities might seem secondary or even optional. Yet, when building a robust investment strategy, commodities deserve careful attention for the unique role they can play—provided one takes into account their specific risks and characteristics.

Commodities behave differently from traditional financial assets. While stocks and bonds can be influenced by similar macroeconomic factors, commodities—be they energy products, agricultural goods, or metals—often follow their own cycles. This distinctive dynamic helps smooth out the overall performance of a portfolio, since the price trends of commodities do not always move in tandem with those of equities or fixed income. In practical terms, a well-considered allocation to commodities can offer a valuable source of diversification, reducing reliance on a single asset class and potentially mitigating losses during equity or bond market downturns.

Inflation is a persistent concern for investors, eroding purchasing power and sometimes weighing heavily on the returns of conventional assets like bonds. Commodities have historically shown a tendency to appreciate when inflation rises, particularly those linked to food, energy, or basic materials, which often see their prices adjust quickly in response to higher costs and global demand pressures. Thus, commodities may act as a hedge, helping to preserve real value during inflationary phases.

Precious metals, such as gold and silver, have a longstanding reputation as "safe havens" in times of market turbulence or geopolitical unrest. Their intrinsic value and global acceptance can provide an anchor for portfolios when confidence in other assets wanes. Although they do not guarantee gains, their tendency to hold value when other asset prices fall can offer psychological comfort as well as a tangible defensive buffer.

Some commodities, notably crude oil or industrial metals, offer tactical investment opportunities due to their sensitivity to supply-demand imbalances, geopolitical events, and economic cycles. Active investors may seek to take advantage of short- or medium-term price movements driven by changes in political situations, trade policies, or global consumption trends. Such strategies, while potentially rewarding, require careful monitoring and an understanding of the specific risks linked to commodity markets.

Key takeaway

Including commodities in a portfolio is not a promise of outperformance, nor an infallible shield against market fluctuations. Rather, it is a strategic choice to strengthen resilience, harnessing assets that move to different rhythms than stocks or bonds. Careful allocation, based on personal risk tolerance and investment objectives, is essential to making commodities a constructive element of any robust investment strategy.

How much does trading commodities cost?

Trading commodities can be an attractive way to diversify your portfolio or seek new profit opportunities. However, before you start, it’s essential to understand the various fees involved—these costs can significantly impact your returns. The main types of fees you’ll encounter are the spread, transaction commissions, overnight financing (swap) fees, inactivity fees, and withdrawal fees. Knowing how these charges work and how they are calculated is key to managing your costs and optimizing your overall profitability.

1. Spread

The spread is the small difference between the price at which you can buy a commodity (ask price) and the price at which you can sell it (bid price) at a given moment. This cost is built into every trade: the moment you open a position, you start with a slight loss equal to the spread.

Example of spread

You want to trade crude oil. The broker quotes ₹6,000 for buying (ask) and ₹5,995 for selling (bid). The spread is ₹6,000 - ₹5,995 = ₹5 per barrel. If you buy one contract (1 barrel), your trade starts with a ₹5 disadvantage due to the spread.

2. Transaction commission

Some brokers charge a commission for every trade you place, either as a fixed fee or a percentage of the trade value. This is added on top of the spread and can impact your overall cost per trade, especially if you trade frequently or with small amounts.

Example of transaction commission

Suppose you trade 5 lots of natural gas, and your broker charges a ₹40 commission per lot. Your total commission for the trade is 5 x ₹40 = ₹200, deducted when you open or close your position.

3. Financing fee (swap)

When you keep a commodities position open overnight (for example, for several days), you may be charged/swapped an interest-like fee representing the “cost” of holding that position. This is commonly known as a swap fee or overnight financing charge, and its amount varies according to the commodity and market rates.

Example of financing fee (swap)

You buy 10 contracts of silver and hold them overnight. Your broker charges a swap of ₹12 per contract per night. After one night, the total swap fee is 10 x ₹12 = ₹120. Holding for five nights would cost 5 x ₹120 = ₹600 in swap fees.

4. Inactivity fee

If you don’t trade for a certain period (e.g., 3 or 6 months), some brokers will charge an inactivity fee. This can be a one-time or recurring monthly charge until you resume trading or close your account.

Example of inactivity fee

You haven’t made any trade for 6 consecutive months. Your broker’s policy is to charge a ₹150 monthly inactivity fee. After two more inactive months, you are charged 2 x ₹150 = ₹300 in inactivity fees.

5. Withdrawal fee

When you transfer funds from your trading account to your bank, a withdrawal fee may apply. This can be a fixed amount or a percentage of the amount withdrawn.

Example of withdrawal fee

You withdraw ₹25,000 from your trading account. If the withdrawal fee is 0.5%, you pay 0.5% x ₹25,000 = ₹125. This amount is deducted, so you receive ₹24,875 in your bank account.

Understanding and anticipating these costs allows you to better plan your trades, maximize your net profits, and avoid unpleasant surprises. Always check your broker’s fee schedule in detail before trading.

Live commodity prices

What is the taxation on income from commodities in IN?

Investing in commodities can be carried out through various instruments: derivatives (CFDs, futures), ETFs, stocks of mining or oil companies, or physical metals. The tax treatment in India (IN) varies depending on both the type of product and the holding period. Generally, these incomes fall under income from capital gains or business income, but the specific regime depends on the nature of investment and individual tax circumstances. Let’s review the main fiscal regimes applicable to commodity-linked investments as per Indian tax law.

CFDs and commodity futures are typically classified as business income under Indian tax law. Trading profits are taxed at the individual’s income tax slab rates. Such transactions must be reported as either ‘speculative’ or ‘non-speculative’ business income depending on whether physical delivery is possible. Speculative losses can only be set off against speculative gains in the same or subsequent four years, while non-speculative losses can be set off more broadly.

Commodity ETFs do not directly invest in shares of companies but track commodity prices, and are treated as debt funds for tax purposes. If held for less than 36 months, gains are taxed as short-term capital gains at the individual’s slab rate. For holdings exceeding 36 months, long-term capital gains (LTCG) tax of 20% with indexation applies. Indexation allows adjustment of the purchase price to inflation, reducing the taxable capital gain.

Shares of mining or oil companies are classified as equity assets, and taxation follows the standard capital gains regime for equities. If sold within 12 months, gains are treated as short-term and taxed at 15% (STT must be paid). If held for more than 12 months, gains up to ₹1 lakh per year are tax-exempt, and above this threshold, LTCG tax is 10% (without indexation benefit). Securities Transaction Tax (STT) is a prerequisite for this regime.

Physical precious metals (e.g., gold, silver) are considered as 'debt' capital assets. Profits from sale within 36 months are short-term capital gains, added to the individual income and taxed as per slab rates. If held beyond 36 months, LTCG tax applies at 20% with indexation. No STT applies on physical commodity transactions.

Taxpayers in India must accurately declare all gains/losses in their annual return and adhere to record-keeping and disclosure requirements. Favourable regimes (such as exemption thresholds or indexation) vary by product and holding period. In all cases, compliance with local reporting, and payment of any Goods and Services Tax (GST) or Stamp Duty where applicable, is essential.

Raw materials: understanding the Contango and Backwardation effects

Understanding the price dynamics of commodities is crucial for making informed investment decisions. One key concept is the “forward curve,” which shows how prices for a commodity change depending on the delivery date: the spot price (today’s market price) versus future prices (contracts for delivery in the months ahead). The shape of this curve—whether it slopes upwards or downwards—gives valuable clues about market conditions. Two main forms exist: contango and backwardation. Recognizing which regime the market is in can directly influence investment choices.

Contango: a more expensive future than today

Contango describes a situation where the price of a commodity for future delivery is higher than that for immediate delivery. In practical terms, the forward curve rises as you look further into the future. This pattern is common for commodities that can be stored easily, like oil or metals.

The main reasons behind contango include:

• Storage costs: Storing a physical commodity until delivery involves expenses (warehousing, insurance).
• Financing costs: The money tied up in the inventory for months also has a financial cost.
• Abundant supply: When supply exceeds immediate demand, sellers are willing to accept a lower spot price.

Contango in oil during surplus periods

Imagine there is a global oil surplus—producers pump more oil than what’s needed immediately. Storage tanks fill up, and the cost to store each barrel increases. The spot price may drop as sellers try to offload their oil, but contracts for delivery in six months remain higher since they include storage and financing costs. This is contango.

Backwardation: when urgency rules

Backwardation represents the opposite scenario—here, the price for future delivery is lower than today’s spot price. The forward curve slopes downward. This often signals a market stressed by immediate shortages or urgent demand.

Backwardation can be caused by:

• Supply shocks or disruptions: Events like droughts, war, or abrupt shortages.
• High immediate demand: Buyers are willing to pay a premium to secure supply now.
• Lack of storability: Perishable goods or commodities hard to store can see this effect.

Backwardation in wheat during war in Ukraine

During the early months of the war in Ukraine, wheat supplies from the Black Sea region were suddenly at risk. Buyers rushed to secure available wheat, pushing spot prices much higher than contracts for later delivery—reflecting the urgent demand and uncertainty about immediate supply. This is backwardation.

Why does this matter for investors?

The structure of the forward curve impacts the return on investment products based on futures, like ETFs or funds tracking commodities. When a fund “rolls” its exposure (sells a contract about to expire and buys a further one), the difference in price matters:

• In contango: The new contract is more expensive. Over time, this “roll yield” is negative—the fund loses a little each time it rolls, eroding performance if spot prices stay flat.
• In backwardation: The new contract is cheaper. This gives a positive roll yield—boosting performance as long as backwardation lasts.

Therefore, understanding whether the market is in contango or backwardation is key to anticipating how these financial products might behave, even if the spot price of the underlying commodity doesn’t change.

Bon à savoir: En résumé

Analyzing the commodity price curve helps detect signals about supply, demand, and market expectations. Knowing whether the market is in contango or backwardation not only improves one’s grasp of current conditions but also helps fine-tune investment strategies, especially for products relying on futures contracts. It’s a fundamental insight for any investor considering commodity exposure.

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.