Gold to gain following drought, higher food pric
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Gold to gain following drought, higher food prices?
King Midas in Greek mythology couldn’t eat gold, but here’s an easier and more timely connection between the metal and agricultural products.
Higher grain prices and ultimately higher food prices are historically positive for gold GCZ2 +0.21% , analysts at HSBC said in a recent note to clients.
Some of that relationship is playing up again as large swaths of the United States have been declared disaster zones due a drought.
Drought conditions are also affecting grain crops in South America and former Soviet republics.
Gold has been trading in a tight range recently, and on Wednesday inched up 0.2% to settle at $1,616 an ounce on the Comex division of the New York Mercantile Exchange.
Grain prices have rallied as analysts and the U.S. Department of Agriculture have slashed crop prospects due to the drought.
- Claudia Assis
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