Gold slips as equities, dollar surge ahead of Fed meet

As the Fed rolled out its three separate rounds of massive purchases, stocks shot up, while the dollar sank along with yields on USA debt.

Japan's Nikkei gained 0.8 percent thanks to the yen's fall against the dollar. But other regional indexes wavered, with South Korea's Kospi slipping 0.2 percent to 2,406.50. They rose over 1.5 per cent as a weaker euro helped the pan-European STOXX 600 generally too.

The Russian ruble is up 0.6% at 57.8120 per dollar.

The two-day Fed Open Market Committee meeting, which begins on Tuesday, will be closely watched by markets as the USA central bank is expected to announce its balance sheet reduction plans while keeping interest rates unchanged in an effort to "normalise" monetary policy.

The Fed left rates unchanged Wednesday and hinted it could raise rates again in 2017, even though persistently low inflation has given some officials second thoughts about a move by then.

While the USA central bank is not expected to raise interest rates this week, remarks from the Fed and its boss Janet Yellen will be pored over for clues about future moves-with talk of another rise-and its plans to wind down the vast bond-buying stimulus put in place during the financial crisis. The European Central Bank is meanwhile expected to shed more light on plans to exit its extraordinary stimulus next month.

"Before the Fed announced its decision, there were high expectations that monetary policymakers would drag interest rate expectations lower for 2017", said Hussein Sayed, chief market strategist at FXTM. "Early movers in the region have so far been seen with mixed movements, mostly in red".

The dollar index rose 0.75 percent, with the euro down 0.03 percent to $1.1888. The Nasdaq composite lost 0.1 percent to 6,456.04.

The euro was up 0.15 per cent at 133.665 yen, recovering some of the losses suffered the previous day, when the common currency's slide against the dollar nudged it away from a 21-month high of 134.160 set on Tuesday. But a more hawkish tone from the Fed could push the yellow metal below $1,300 temporarily, according to Boele.

In energy markets, oil prices retreated from near-five-month highs ahead of this week's meeting between key oil producers on the outlook for further supply cuts.

USA crude oil prices rose above US$50 per barrel on Monday and were near last week's multi-month highs as the number of USA rigs drilling for new production fell and refineries continued to restart after getting knocked out by Hurricane Harvey.

Brent crude was up 0.1 percent at United States dollars 56.50 a barrel after reaching a five-month high of USD 56.53 overnight. Brent crude, used to price global oils, gained 14 cents to $56.15 a barrel in London.

  • Zachary Reyes