Gold Falls as Bernanke Stays Mum on QE3 (Update 1)

NEW YORK (TheStreet) -- Gold prices fell Tuesday after Federal Reserve Chairman Ben Bernanke stayed mum about whether the central bank is prepared to launch another round of quantitative easing.

Gold for August delivery settled down $2.10 to $1589.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1598.80 and as low as $1571 an ounce, while the spot price was ticking down $2.40, according to Kitco's gold index.

Bernanke is giving his semi-annual testimony on monetary policy before Congress over the next two days, starting with an appearance before the Senate Banking Committee on Tuesday. His prepared statement acknowledged the soft patch the U.S. economy has hit and gave no hints that QE3 is on the way.

"The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year," he said. "After rising at an annual rate of 2-1/2 percent in the second half of 2011, real gross domestic product (GDP) increased at a 2 percent pace in the first quarter of 2012, and available indicators point to a still-smaller gain in the second quarter."

George Gero, precious metals strategist at RBC Wealth Management, wasn't expecting much from Bernanke on the subject of QE3 anyway because of the venue.

"I don't think that this is the platform when he will usually say something that is going to be unusual or dynamic," said Gero."Basically he's testifying, which means he's answering questions."

Silver prices for September delivery settled less than 1 cent lower at $27.32 an ounce, while the U.S. dollar index was down 0.08% to $83.07.

"While the gold market was hoping for obvious signs of further quantitative easing from Chairman Bernanke in his prepared testimony before the US Senate Finance Committee; the history of the Federal Reserve is subtlety when there is no immediate crisis to tackle," said Jeffrey Wright, managing director of metals and mining at Global Hunter Securities.

Wright said that Tuesday's gold selloff may continue into Wednesday as Bernanke speaks to Congress.

Gero said the market is weak Tuesday because of benign inflation figures and a weaker outlook on Germany.