Gold may be set to edge higher if US yield curve flattens

Lower interest rate expectations Stateside might help to prop up gold prices and support a move higher, one of the world´s largest brokers said.

'Safe haven' demand as the lower price of oil pressures producer countries also appeared to remain intact despite a rise in the euro/dollar, strategists at HSBC said in a research note sent to clients.

More significantly, the behaviour of US Treasury note yields also appeared to reflect some uncertainty among investors that global financial turbulence might impact the real economy.

"If this impacts US monetary policy, gold may be a beneficiary," HSBC said.

Pricing from interest rate futures and the flattening yield curve indicated that the likelihood of tighter monetary policy had diminished, the broker added.

So while it was conceivable that petroleum producers might be able to rally oil prices, which might remove some of the geopolitical bid from oil, HSBC believed gold was building a base from which to edge higher, although in the near-term it might trade around $1,100 per ounce.

As of 16:55GMT gold futures on COMEX for delivery in April were rising by 1.21% to $1,118.90 per ounce.