Gold prices dropped on Friday ahead of the US Federal Reserve's conference that is expected to shed more light on tightening policy plans.

As of 12:37am UAE time, spot gold was trading at $1,751.05 an ounce, down 0.36% from the previous day's close.

All eyes are on the annual meeting of central bankers from around the world in Jackson Hole, Wyoming that is underway today, in which Jerome Powell, US Fed Chairman, is expected to deliver his speech.

The precious metal had gained ground on Thursday, hitting as much as $1,762.50 an ounce.

Investors are expected to scrutinise Powell's speech to get more hints on where interest rates are headed. A hawkish stance could bring downside for the yellow metal.

"If Fed reiterates the fact that inflation is a top priority and will continue hiking until inflation is formally under control ... if they continue to be hawkish we could see fresh downside resuming for gold," Harshal Barot, a senior research consultant for South Asia at Metals Focus, was quoted by Reuters as saying.

According to Saxo Group, Powel "may do little more than remain on message" on the Federal Reserve's plans for tightening policy.

"Powell is widely expected to stay on message on the Fed's hopes to get ahead of the curve, but surprises are possible if his language is a bit more pointed than expected," Saxo said in a note on Friday.

(Reporting by Cleofe Maceda; editing by Seban Scaria)