| Commodities tend to move lower when real interest rates rise, as supply increases and capital flows into higher yielding assets. For instance, commodity prices soared in the 1970s as real interest rates moved into negative territory. Commodity prices then fell in the 1980s when Paul Volcker raised interest rates to fight inflation and real interest rates reached all-time highs.
There is a very strong inverse relationship between real interest rates and commodity prices over time. In recent years, both nominal and real interest rates have been very low due to central bank monetary easing policies and low inflation expectations. These dynamics helped commodity prices move substantially higher following the 2008 economic crisis...............................................Full Article: Source
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