Commodities & indices · Intermediate

How Interest Rates Affect Commodities And Indices

A 1-minute lesson from the MarketPro academy, one of 16 in commodities and indices.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

Short answer

Central bank interest rate decisions ripple across both commodity and equity index markets, though the mechanisms differ between the two asset classes. Because both commodities and indices respond to interest rate shifts, though through different channels, monitoring central bank policy and rate expectations is relevant across both parts of this asset class, and reactions can sometimes be counterintuitive relative to simple assumptions.

Central bank interest rate decisions ripple across both commodity and equity index markets, though the mechanisms differ between the two asset classes.

Effect On Indices

Higher interest rates increase borrowing costs for companies, which can weigh on corporate earnings and, in turn, share prices.
Higher rates can make bonds and cash more attractive relative to equities, potentially reducing demand for stocks.
Growth-oriented sectors, whose valuations often rely on future earnings expectations, can be particularly sensitive to rate changes.

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Effect On Commodities

Higher interest rates raise the opportunity cost of holding non-yielding assets like gold, since money could otherwise earn interest elsewhere.
Interest rate expectations often move alongside currency strength, and since many commodities are priced in a specific currency, currency shifts can affect commodity prices even without a change in physical supply or demand.
Higher borrowing costs can also affect the financing of commodity production and storage, indirectly influencing supply decisions.

Because both commodities and indices respond to interest rate shifts, though through different channels, monitoring central bank policy and rate expectations is relevant across both parts of this asset class, and reactions can sometimes be counterintuitive relative to simple assumptions.

Lesson 9 of 16 in Commodities and indices

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Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

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