Dollar down, gold up ahead of central banks meet

The U.S. dollar slid on Tuesday, especially against Asian currencies, pushing gold prices near record highs, while stock markets were steady ahead of several big central bank meetings this week.

The Australian dollar rose, staying above USD 0.90 ahead of a decision on interest rates at 0330 GMT. Most dealers were expecting a quarter percentage point increase in the base rate, though the risk loomed of a more aggressive move.

Housing prices are on a tear in Australia, similar to other parts of Asia, keeping monetary authorities increasingly willing to take action to prevent bubbles.

Evidence of a sustained recovery in world industrial activity may force policymakers to spell out the pace at which unusually abundant and cheap money will be withdrawn.

The euro was up 0.2% to USD 1.4798. The bout of profit taking that lasted for a week appeared to have run its course, leaving the euro in a rising but narrowing trading channel.

The resumption of U.S. dollar weakness prompted traders to scoop up some bargains. The Australian dollar rose 0.4% to USD 0.9070, still off a 14-month high above USD 0.93 hit in October.

The Federal Reserve will kick off a two-day policy meeting on Tuesday, after which it is expected to keep rates unchanged. However, there is a chance the Fed will drop language on keeping rates low for an extended period of time.

"We do not expect that to happen, so the dollar should resume its trend downwards to the end of this year," said John Horner, foreign exchange strategist at Deutsche Bank in Sydney.

In equity markets, the MSCI index of Asia Pacific stocks outside Japan was largely steady, with gains in utilities and consumer discretionary stocks offsetting declines in financials.

The Thomson Reuters index of regional stocks was up 0.9%.

Japan's market was shut because of a public holiday.

Gold rose half a percent in the spot market to USD 1,064.55 an ounce. The record intraday high was USD 1,070.40 hit on October 14. Gold is up 21% this year, and will likely keep its record of not having a down year since 2000.

The International Monetary Fund said on Monday it sold 200 tonnes of gold to the Reserve Bank of India for USD 6.8 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold's rally.

While the IMF's plan to sell some of its gold holdings had been flagged for a year before it was formally approved in September, the speed of the deal and the buyer were a surprise for traders, who had expected China -- not India -- to be the leading contender as Beijing diversifies its vast reserves.

"The fact that they've sold the gold to India would suggest there's going to be fewer official sales by the IMF on the market. So that might be a positive theme for the gold price," said David Moore, commodities strategist at Commonwealth Bank of Australia.

This was the first time since 2000 that the IMF sold gold to a central bank.

U.S. oil futures were essentially unchanged and remained above USD 78 a barrel. Crude's break of USD 80 ran out of steam in November, though near-term direction is largely pinned on the U.S. dollar.

(Additional reporting by Anirban Nag in SYDNEY; Editing by Jan Dahinten)