I think the dollar is oversold in the near term. The probability of a rate hike at the Federal Reserve's September meeting has fallen to 38% from 48% this time yesterday and 52% a couple of weeks ago. "The Federal Open Market Committee (FOMC) minutes that were released later that day also gave financial markets ammunition to believe that the rate hike will come later". Currencies of economies with the lowest borrowing costs, including the euro and the yen, rallied against the dollar as bets waned that the Fed will increase its benchmark rate in September. "Janet Yellen has gone to enormous lengths to ensure that another taper tantrum does not occur when the Fed does act". The Fed has made clear that it wants to raise rates this year. "Members generally agreed that additional information on the outlook would be necessary before deciding to implement an increase in the target range", the minutes said. However, analysts subsequently said a September rate hike remains a distinct possibility. The minutes said U.S. economic conditions were closer to, but haven't yet reached, the level that warranted tighter monetary policy. However, soft Chinese economic data, sliding commodity prices and unconvincing U.S. inflation data have dulled expectations of a near-term U.S. rate hike. But "several" officials noted that "some noticeable margins of slack remained", including a high share of employees working part time because full-time jobs were not available. That sentiment, combined with a broader recognition among "many members" that full employment was close, led the committee to say in its policy statement that it only needed to see "some" more improvement in labor markets before hiking rates. Declining energy prices and a strengthening dollar have weighed on bond-market inflation forecasts. "That's probably because the inflation numbers are a puzzle". Earlier this month, the BoE said that while inflation would remain subdued until at least the middle of 2016, it would pick up as growth accelerates. The most active gold contract for December delivery rose $11, or 0.98 percent, to settle at $1,127.90 per ounce on Wednesday, Xinhua reported. China's slowdown also troubled Fed policymakers. "What's supporting gold is that from unrelentingly bad news, which we saw until late July-early August, the news flow has been more bullish to gold after the Chinese central bank currency devaluation", Macquarie's Turner said. China's shock move to devalue its currency last week, which followed a string of disappointing economic data, has left many traders anxious about the future. Steelers Lounge http://steelerslounge.com/2015/08/gold-hits-5-week-high-on-lesser-us-sept-rate-hike-chance/1236/

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