Gold, Silver Prices Mixed Before Fed Comments

NEW YORK (TheStreet ) -- Gold and silver prices closed mixed Tuesday on lackluster trading ahead of Ben Bernanke's speech on the outlook of the economy.

Gold for August delivery lost $3.20 to settle at $1,544 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,551.40 and as low as $1,537 while the spot gold price was up $1.40, according to Kitco's gold index. Gold prices had been tiptoeing higher for most of the trading session on safe haven buying.

Silver prices rose 26 cents to close at $37.04 an ounce.

Investors dabbled in gold and silver as protection Tuesday, but were distracted by a stronger stock market in the U.S as it rebounds after four straight sessions of losses. Equities' strong bounce resulted in lackluster buying, but if stocks shake off the rally and continue their downtrend, gold and silver could see higher prices as investors look for a safe place to stash cash.

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Gold and silver are also waiting for Federal Reserve Chairman Ben Bernanke to speak at the International Monetary Conference in Atlanta, where he is expected to give his outlook for the economy at 3:45 p.m.

If the recent jobs and manufacturing data are causes for concern, speculation will ignite over the possibility of another quantitative easing program, i.e. lots of cheap money in the system, which would be good for gold and silver as inflation hedges. On the other hand, if Bernanke acknowledges the disappointing data but signals the economy is on track, experts will be looking for signs of monetary tightening like a rate hike.

In the meantime, gold has been stealthily zeroing in on its record close of $1,557.10 an ounce. Its record intraday high is $1,577.40, but a new record settle could put the metal back on investors' buy lists especially if fund managers jump back into the market.

Phil Streible, senior market strategist at Lind-Waldock, said gold will resume its uptrend "as long as we stay above $1,515." Streible sees prices between $1,580-$1,620 an ounce once gold sees a two-day close above the $1,550 level.

A weaker dollar should help gold and silver prices. The U.S. dollar index is currently down 0.63% at $73.52 as the European Union, IMF and European Central Bank seem intent on helping Greece out of its fiscal crisis.

There are also increased expectations that the ECB at its meeting Thursday could signal an interest rate hike of 25 basis points in July. The key phrase will be "strong vigilance," which has been the signal of a rate hike in the past. Inflation was reportedly 2.7% in May above the central bank's 2% target rate. A rate hike would give more confidence to the euro and pressure the dollar.

Streible points out that gold has been moving with the dollar recently, disrupting their typical inverse correlation, but a weaker dollar makes gold cheaper in other currencies, which will only add to its appeal. Streible isn't scared off by high prices and urges investors who aren't exposed to gold or silver to dollar cost average each month, or buy a set amount of the metals regardless of price.

Gold mining stocks were mixed. Kinross Gold(KGC) was down 0.38% at $15.55 while Yamana Gold(AUY) was flat at $12.14. Other gold stocks, Agnico-Eagle(AEM) and Eldorado Gold(EGO) were trading at $64.31 and $14.64, respectively.

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--Written by Alix Steel in New York.

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