It may seem of late that even a small interest rate hike by the Federal Reserve Bank can cause a ripple effect in world markets. Or maybe it’s just the threat of the rate hike that is creating havoc across the globe.

Higher interest rates help strengthen the dollar which in turn brings the price of most commodities down. Or so it seems of late.

Oil Prices Drop

The impact of a possible June rate hike, signaled by the minutes of the April 26-27 FOMC policy meeting, was felt immediately, pulling oil prices down from its recent 2016 highs and snapping a two-day rally on Wednesday.

Before the release of the minutes, Brent and U.S. crude’s West Texas Intermediate futures had advanced closer to $50 a barrel after large gasoline and distillate drawdowns were announced by the U.S. Energy Information Administration (EIA). But minutes after the news was announced, late afternoon trading of oil sent the dollar rallying against a basket of currencies and the crude benchmarks into negative territory.

Brent crude settled down 35 cents at $48.93 a barrel after coming in earlier to within 15 cents of striking the $50 target coveted by oil bulls. That session’s peak of $49.85 was the highest for Brent since November. WTI closed down 12 cents at $48.19 a barrel after reaching $48.95 – its highest level since mid-October.

Oil prices are up about 80 percent or more from 12-year lows of around $27 for Brent in January and about $26 for WTI in February. The rebound has been fueled by declining U.S. crude output, a wildfire that has restricted Canadian oil exports to the United States and outages in Libyan and Nigerian supply.

Gold Prices Down

Another commodity is also being hit by the possibility of a Fed interest rate hike. Gold fell more than one percent on Wednesday after the dollar hit its new three-week high. Gold is usually seen as a hedge against inflation and is highly sensitive to rising interest rates, which increase the cost of holding it.