While everyone waits for Bitcoin to halve, the first quarter of 2024 brought other developments that had a greater impact on the CFD industry. One of these is the rise in gold prices, which has both drawn attention and increased retail trader activity. But can this last forever, generating permanent profits for CFD brokers?

Despite all the media hype about cryptocurrencies, CFD industry traders prefer other, more traditional instruments. For example, if we look at the CMC Markets 2023 report, we see that the most popular instrument class in 2023 (based on revenue) is “index trading”. However, the second most popular asset class is “Commodities”. It accounts for 22% of revenue, while index trading accounts for 41%. Although the share of revenue is not exactly the same as the share of trading volume, it is a good reflection of what UK brokers' customers choose to trade. Furthermore, gold and silver are not the only instruments traded in the “commodities” category, so the 22% mentioned should at least be split between gold, silver and oil.

Another European broker, XTB, has a similar track record, but with higher revenues from commodities. In its 2023 report, we can see that while index trading is the most popular among XTB clients (47.8% of revenues), the second most popular category, “commodities”, brings in 39.9% of revenues, which is a much larger share than in the case of CMC Markets. In both cases, CMC Markets and XTB, we see an improvement in commodities revenues compared to 2022, probably due to an increase in gold trading in 2023.

Doo Prime recently published more interesting results. The global CFD broker, which traces its roots back to Hong Kong, had a trading volume of $95 billion in March 2024. According to the same data, more than 70% of this volume was attributed to gold trading (XAU/USD), while only 11% of the volume was related to EUR/USD. Assadour Khabayan, Analyst at Doo Prime, confirms to Finance Magnates: “Gold was the most popular asset for Doo Prime clients in March. Gold was the most popular asset among Doo Prime clients in March. It had the highest trading volume at $67.11 billion and the largest increase compared to February at $22.6 billion, a 50.70% increase."

Does metals trading generate extra profits for CFD brokers?

We agree that metals trading is popular. However, this will vary from broker to broker, depending on the regions in which they operate. Brokers that specialize in Asia will benefit more from offering CFD metals trading, while in other regions, such as Europe, such trading will be less popular. Finally, we need to remember that the current popularity of gold trading is a result of the bull market, which has caused the price of gold to break previous record levels. This attracted the attention of retail traders. But this will not last forever. Gold itself is not a volatile market and therefore naturally does not attract large volumes.