NEW YORK ( TheStreet ) -- Gold prices fell Tuesday as hints of more quantitative easing from Federal Reserve Chairman Ben Bernanke helped stocks while gold plummeted through some key technical levels.

Gold for December delivery sank $41.70 to close at $1,616 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,681.50 and as low as $1,613 an ounce, while the spot gold price was losing $51, according to Kitco's gold index.

Silver prices shed 95 cents to close at $29.83 an ounce while the U.S. dollar index was up 0.04% at $79.58.

Bernanke put more quantitative easing back on the table in a speech before the House Financial Services Committee on Tuesday, which paradoxically had a negative effect on gold. The Fed is "prepared to take further action as appropriate," he reiterated. "We never take anything off the table."

Bernanke also said that inflation, now at 3.8%, had begun to moderate. If inflation is stable and unemployment keeps rising it will be hard for the Fed to find a good reason not to pump more money into the system.

Typically more QE, as it is called, is good for gold -- it weakens the dollar and boosts gold as a safe haven. But it was having the opposite effect for the commodity. Investors were flirting with stocks, hoping that more easing would boost the market, and rejecting gold, prices had been very volatile in early morning trading.

"I'm not so enthused over here by the price action," said Phil Streible, senior market strategist at MFGlobal. "The safe havens are the dollar, gold, Treasuries and the yen and they all turned lower after Bernanke starting discussing that they were prepared to take further action and the euro and stocks led the rally."

Streible also said many traders would have dumped gold positions after gold prices broke Monday's low of $1,620 an ounce thinking there was more downside to come. "I think people are still missing that gold is moving higher in the Asian markets at night and if they start coming in again, its game on" for higher gold prices, he said.

"Gold looks set to benefit from further flight-to-safety purchases in addition to good physical demand," said an early morning report from FastMarkets.

Greece announced that it will not meet its 2011 and 2012 deficit forecasts and officials from the International Monetary Fund, European Union and European Central Bank, aren't releasing Greece's next tranche of bailout money -- €8 billion -- until mid-November. Reportedly Greece now has enough money to get it through October but the uncertainty will likely add to volatility throughout markets including gold, most experts say.

"If you start seeing some kind of fiscal responsibility," said Streible, then that would crimp gold buying. But "the problem is there are 17 countries, there are too many cooks in the kitchen over there and they can't agree on a proper recipe," he said.

European leaders signaled that they will make a decision regarding additional aid to Greece in late October, which was later than previously expected. According to a Bloomberg report, European financial ministers are mulling technical revisions for a second Greek bailout, which could mean bondholders will take a bigger hit on Greece debt.

Gold mining stocks were getting hammered Tuesday. Barrick Gold ( ABX) was falling 5.80%% to $43.53 while Newmont Mining ( NEM) was shedding 3.86% at $60.83. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were also trading lower at $55.42 and $15.55, respectively.

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-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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