Gold prices climb as eyes train on central banks

The price of gold was on the rise on Thursday as conjecture mounted about central banks preparing to intervene and spur the national economies they support, according to Reuters.

Late last month bullion propelled past the milestone price of $1,600 per troy ounce on the back of speculation that both the European Central Bank and the U.S. Federal Reserve were preparing to spur their economies.

The economy of the 17-nation euro bloc is hobbled by the sovereign debt crisis, which has prompted a near recession in some nations while attacking banks, markets and public finance systems. The U.S. economy, the globe's largest, has endured some tumult as it attempts to spearhead the world's recovery from the Great Recession. Federal Reserve Chief Ben Bernanke is set to convene later this month with staff at its yearly symposium in Jackson Hole, Wyoming, where discussion about stimulus measures is likely to ensue.

"After Jackson Hole, the markets will hopefully have a better idea," head of trading Afshin Nabavi with MKS Finance told Reuters, noting no liquidity during the summer prevented bullion from driving higher in value. "Until then, we should continue trading within this range."

At 1:40 p.m. on Thursday, the price of gold climbed 0.7 percent, an $11.30 list to $1,617.90 per troy ounce.

Watered-down dollar

Should monetary easing programs follow, the precious metal is likely to benefit. Liquidity would rise and pressures would mount on interest rates in the long term. That would prompt concerns about inflation and pinch the U.S. dollar.

Quantitative easing, the purchase of debt, typically floods the market with the U.S. dollar, which draws down its value. When the value of the U.S. dollar slips, the price of gold increases and vice versa since the two perform the inverse of one another.

For that reason, investors, traders and analysts are keeping a close eye on Bernanke as the annual symposium approaches. The Fed also is meeting in September, when some anticipate results of discussions about quantitative easing will be invoked.

MarketWatch reports gains to bullion on Wednesday stopped two consecutive trading sessions of losses and one broker and futures analyst told the news service that the U.S. dollar was growing weaker.

Inflation could prompt QE

Inflation information that was released on Wednesday mollified some investors that pressures on prices would not serve to stave off the Fed from releasing additional quantitative easing should a more negative view of development and growth become clear.

One analyst predicted gold will rise in value per the action of central banks.

"My general view is that for the time being major central banks will let go of the mandate of price stability in favor of spurring growth figures," analyst Bayram Dincer with LGT Capital Management told Reuters. "This means that the central banks in an explicit or implicit inflation targeting regime will try to anchor inflation expectations around 3.0 percent. This change would be gold price supportive."

Stimulus in the Asian Nation

The premier of China helped prompt gold to rise on Thursday with commentary that alluded to monetary stimulus, according to The Wall Street Journal.

Wen Jiabao said space is in play to implement an operation for monetary policy, suggesting that Beijing might be driving toward a stimulus program.

Both the U.S. and China, the respective hosts of the globe's biggest and second-biggest economies both have endured a reduced pace of development and growth.

While some euro zone nations have entered into a recession, the 17-nation bloc as a whole is believed to nearing that classification. For that reason, the European Central Bank also is believed to be considering monetary stimulus programs to spur the economy.