Gold Crawls Higher Ahead Of Fed

Andrew Cummings
September 23, 2017

On Monday, the two benchmark US indexes extended gains, albeit modestly, to close at record highs.

The central bank also announced it would next month begin cutting back on its holdings of bonds and other assets built up as part of a scheme to keep rates low and steer the economy through the financial meltdown.

While the Fed is expected to leave interest rates unchanged, many investors will focus on details of how the central bank plans to unwind its $4.5 trillion balance sheet in the months ahead, as well as its views on inflation. It's set to make its interest rate decision on Thursday.

"The quiet nature of (the market) is in anticipation of the Fed meeting".

"There's some concern among investors as to how this will work, and how it will affect long-term rates".

"If we move closer to a USA rate hike, that should come along with a bit more dollar strength and euro weakness which would harden the ECB's exit case and be a headwind for government bonds", said Commerzbank strategist Rainer Guntermann. As the Fed rolled out its three separate rounds of massive purchases, stocks shot up, while the dollar sank along with yields on US debt. The United States ordering new sanctions against North Korea was also seen to have weighed on Wall Street.

On Thursday, the euro was flat at $1.1893 having traded above $1.20 on Wednesday, while the dollar was up 0.3 percent at 112.53 yen. Hong Kong's Hang Seng index slipped 0.1 percent to 28,072.92 and the Shanghai Composite in mainland China dipped 0.1 percent to 3,361.72.

USA data showing domestic home construction fell for a second straight month in August weighed on the dollar index earlier.

Stateside, the Dow Jones industrial average rose 0.18 percent, or 39.45 points, to close at a record 22,370.80, the S&P 500 advanced 0.11 percent, or 2.78 points, to end at 2,506.65 and the Nasdaq tacked on 0.1 percent, or 6.68 points, to finish the session at 6,461.32.

Investors will be watching domestically for second-quarter gross domestic product figures which are expected to show economic growth accelerated to a quarterly pace of 0.8 percent from 0.6 percent in March. "That's why financials have found some strength", said Ryan Detrick, senior market strategist for LPL Financial.

In late-morning trades, the benchmark Nikkei 225 Index is advancing 144.07 points or 0.71 percent to 20,454.53, off a high of 20,481.27 in early trades.

LONDON, Sept 19 (Reuters) - The dollar hit an eight-week high against the yen on Tuesday as US central bank policymakers meet to discuss further monetary tightening, with renewed calm over North Korea easing demand for perceived safe havens.

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