Gold prices hover as Fed symposium approaches

The price of gold dropped the most in 14 days on Tuesday amid conjecture suggesting the central bank of the U.S. will postpone plans to implement monetary easing, according to Bloomberg.

Indications about an improving economy, the globe's largest, could be responsible for the delay. June saw an increase in home prices in 20 U.S. cities for the first time in nearly24 months, according to a private index.

The U.S. Commerce Department is set to release a first revision to second-quarter gross domestic product on Wednesday, which is likely to indicate growth proceeded more rapidly that previously reported, a Bloomberg survey indicates.

Chairman Ben Bernanke with the U.S. Federal Reserve is preparing for a Friday speaking engagement later this week at the institution's annual retreat in Jackson Hole, Wyoming, for which momentum is gaining steam.

"The market is in a wait-and-watch mode ahead of the meeting," head dealer Frank McGhee with Integrated Brokerage Services in Chicago told the news source. "We are also witnessing some profit taking."

At 11:25 a.m. on Tuesday, the price of gold lost 0.15 percent, a $2.50 slip to $1,673.10 per troy ounce.

One the rise?

Following gains of 3.3 percent last week, bullion might be prepared to continue the upward tick.

When Bernanke spoke in Jackson Hole two years ago, he dropped hints about the second round of quantitative easing, which ended up being $600-billion-worth of bond purchases. Monetary easing policies such as asset purchasing typically push up the price of gold since the market is flooded with U.S. dollars, that lose value. Consequently, the price of gold rises since the two perform the inverse of one another.

From December 2008 through June 2011, the price of gold skyrocketed 70 percent. During that time period the Fed kept borrowing costs at all-time lows and purchased $2.3 trillion-worth of debt during two rounds of quantitative easing.

Last week's gains were the highest weekly advance since January, according to Bloomberg.

Steadying prices

Gold prices were hovering on Tuesday about their top value in four months, Reuters reports.

Thus far during the month of August, the precious metal has gained more than 3 percent, and bullion is driving toward its top monthly gains since January.

The primary driver for the increases has been anticipations about central banks getting ready to implement easing policies to spur the economies they support. The two key banks under scrutiny are the U.S. Federal Reserve and the European Central Bank.

"We will consolidate here ahead of Jackson Hole on Friday and the ECB statement next week," analyst Andrey Kryuchenkov with VTB Capital told Reuters. "The last week's rally is exhausted for now while we also had minor profit taking on Monday in low volumes. So for now, we will carry on here above $1,650-1,655, capped at $1,675."

Gains kept in check

The Wall Street Journal reports the price of gold was tempered on Tuesday due to concerns about the sovereign debt crisis.

Preoccupations about the nearly 3-year-old debt scourge were trumping anticipations about liquidity boosts by the central bank of the U.S.

The second quarter of this year saw Spain, a flashpoint in the 17-nation euro bloc for debt scourge concerns, endure a worsening economic recession, the nation's statistics institute noted. Considered the bloc's fourth-largest economy, Spain saw contraction of 0.4 percent during the second quarter as compared to the first.

As compared to the second quarter of last year, Spain's second quarter of 2012 was down 1.3 percent.

But, despite losses to gold, the value of the shared currency of the European Union climbed against the U.S. dollar, The Wall Street Journal reports.