During last week, American stock indices have grown, as well and oil prices, while the USD has declined against major currencies.
Last Thursday, all three indices DJIA, S&P500, Nasdaq have reached the record level within one day for the first time since December 31, 1999. S&P500 closed at the record highs for the ninth time this year, and the DJIA – for the eighth time.
Weak US data on retail sales for July, GDP in Q2 and labor productivity, which was released last week, has lowered chances of the interest rates increase in the USA in the coming months. Probability of the rate hike in September in the United States is now only 12%. Probability of the rate hike in December is about 40%.
The USD index WSJ, which traces dynamics in the USD against the basket of other currencies, fell by 0.2% to 86.18.
On Monday, the President of San Francisco Fed, Mr. John Williams said the Fed should either raise the target inflation rate, which is currently 2%, or determine new target, based on prices or economic growth. High target of inflation rate may give the Fed chances to keep interest rates at the current levels.
This fact indicates lack of consensus among the leaders of the Fed in the issue of the interest rate increase in the country.
Comments by John Williams have led to the significant decline in the US dollar at the Asian session on Tuesday. The price of gold has grown by $10, up to the level of 1350.00 USD per ounce.
Deterioration of the global economy, lowering of the interest rates by some of the world's Central Banks and prospect of more monetary policy easing by these banks will support gold prices.
Based on the weak American economic data and low chances of the interest rate hike in the USA, long positions in gold are preferable.