Yet the Fed remains confident economic conditions should evolve to warrant future rate hikes.
"Though one member noted that easier financial conditions might warrant tighter monetary policy (the conventional wisdom), another floated the more avant-garde view that elevated risky asset prices were a response to markets adjusting to structurally lower neutral interest rates - a factor which the Fed can not control", said Patel.
U.S. Defense Secretary Jim Mattis hinted on Monday about the existence of military options on North Korea that might spare Seoul from a brutal counterattack but declined to say what kind of options he was talking about or whether they involved the use of lethal force. The next stage is not to sell holdings but to halt the reinvestment of proceeds from maturing bonds.
But some believe the Fed will be cautious this year. It will also dictate the legacy of Federal Reserve chair Janet Yellen. Yet it always winds up disappointed. Gold is a non-income generating asset, and is thus at the will of interest rates. The Fed's portfolio was close to $US900 billion before the 2007-2009 financial crisis and ballooned to near $US4.5 trillion by late 2014, where it has roughly stayed since.
With the bank's outlook appearing to have become increasingly upbeat in recent months, the minutes may help push the Australian Dollar slightly higher should the minutes contain no major surprises. Instead, inflation has been in a relative freefall, plummeting from 1.89 percent in January to its current 2017 low of 1.41 percent. "We forecast only two quarter-point hikes now for 2018 and 2019". At that point, they'll release what's come to be known as the "dot plot".
The Canadian dollar had surged to a two-year high of C$1.2063 on September 8 after the BOC hiked interest rates.
"If the language does provide further illumination to the Fed's intentions in December, I definitely think that will move gold prices", said Rory Johnston, a commodity economist at Scotiabank. The Fed's target rate for core PCE is 2 percent. So much for that idea.
FILE PHOTO - A Japan Yen note is seen in this illustration photo taken June 1, 2017.
Zandi said with the unemployment rate "falling dramatically", nearing 4 percent, inflation will eventually follow. That inflation could also damage the economy. "This is likely leading to the lack of reaction or interest from foreign participants".
This view is shared by markets do not expect the Fed to raise short term rates this week, and increasingly it is seen as not hiking again this year.
"It's just a matter of time". It's also expected that the process will happen very gradually: a reduction of $300 billion or so in the first year, then another $500 billion in the second. Economists believe it will take several years before the Fed can reduce its balance sheet down to $3 trillion.
The president of the Reserve Bank of Philadelphia, Patrick Harker, said the asset-unwinding measures will move slowly. The economy continues to grow at a moderate, yet stable pace. It's now sputtering at 1.4 percent. And therein lies the puzzle that vexes the Fed; trying to explain away a lack of inflation with so many tailwinds at the economy's back.