How do interest rates affect commodity prices??

Question

i was wondering how a change in the interest in the UK affect commodity prices such as oil.

and also if you could giv an explanation why it affects it

thanks

Answer 1

When interest rates are down, there is more money in circulation. When more money's in circulation, the money is worth less than before. When money's worth less, prices increase (including oil). Therefore, lower interest rates raise commodity prices.

Answer 2

When interest rates are down people tend to not sell goods because the return on their money is low.  They want to wait and sell when the can get a better rate on return.  Thus, there is less supply and that drives prices up.  Raise interest rates and commodities will come down.