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Gold traders heady on the best first half for the precious metal in almost 40 years are now pausing to eye the punch bowl.

The metal's 30-day historical volatility dropped to the lowest since October 2014 this week as investors await guidance on interest rates when Federal Reserve Chair Janet Yellen speaks in Jackson Hole, Wyoming, on Friday.

Gold posted the biggest first-half gain since 1979 as bets that the Fed will be slow to raise interest rates and a slowdown in Europe boosted demand for the metal as a haven. The rally has faded in the second half as signs of an improving U.S. economy rekindled rate concerns, sparking caution among some investors and prompting them to rein in bullish bets.

"Yellen might use Jackson Hole this time to bring forth further guidance," Marty McGuire, a managing director-market strategy at TJM Investments in Chicago, said in a telephone interview. "Given that possibility, that's why the gold market is coiling up. There's fairly limited action right now."

Gold futures for December delivery slid 0.4 percent to settle at $1,324.60 an ounce at 1:46 p.m. on the Comex in New York, a fourth drop in five sessions. Aggregate volume in futures trading was 22 percent below the 100-day average for this time, according to data compiled by Bloomberg.

Other officials at the Fed, who as the aphorism goes are tasked with taking the punch bowl away just as the party gets going, have signaled there could be a hike this year, while minutes from their last policy-setting meeting showed divisions among members.

"A number of key Fed officials, including New York Fed President William Dudley and Vice Chair Stanley Fischer, have come out last week to prime the market for a possible hike," said Vyanne Lai, an economist at National Australia Bank. "Markets generally believe that Yellen would be more hawkish."

In other precious metals news:

• Holdings in bullion-backed exchange traded funds were at 2,033.2 tons on Wednesday, near unchanged in the past week, data compiled by Bloomberg show.

• Silver futures for December delivery fell 0.4 percent to $18.615 an ounce on the Comex.

• On the New York Mercantile Exchange, platinum dropped while palladium gained.