* Bernanke comments puncture expectations for imminent QE3
* Gold, silver down despite gains in oil
* ECB meeting expected to lay ground for July rate hike
* Coming up: US initial jobless claims,Trade balance Thurs (Recasts, updates prices, adds comment, link to graphic)
By Frank Tang
NEW YORK, June 8 (Reuters) - Gold fell on Wednesday as the dollar index gained and a day after Federal Reserve Chairman Ben Bernanke offered no hints of further U.S. monetary easing but acknowledging the economy has slowed.
Bullion investors were disappointed with the uncertainty over whether the Fed would embark on a third round of government bond buying, a form of money creation known as quantitative easing (QE). Gold is up 5 percent in the past three weeks on bleak U.S. economic data, including a weak jobs report.
"We know that the economy is weaker than the Fed would have
wanted it to be," said Axel Merk, who manages $700 million
mutual fund assets at Axel Investments
"But it's too early for another round of QE, and that's reflected in the market," he said. "It was a gradual process as these things don't happen overnight."
The second round of quantitative easing, dubbed QE2, in which the central bank has bought $600 billion of government bonds to stimulate economic growth, is set to expire by the end of June.
Spot gold
U.S. gold futures for August delivery
COMEX gold futures volume was below 110,000 lots, almost half its 30-day average. Volume has been lackluster since last week, a period when bullion prices have largely rangebounded.
Silver
Most economists said that the Fed is not expected to tighten liquidity immediately after QE2, but it remains unclear if the U.S. central bank will use additional market stimulus.
Despite Wednesday's recovery in the dollar, in the longer term, gold is set to be supported by dollar weakness with the Fed showing no signs of reversing its easy interest rate policy.
The dollar was up half a percent against a basket of six other major currencies <.DXY>, but it hit a one-month low against the yen over U.S. economic worries. [FRX/]
POSSIBLE U.S. DEFAULT, ECB MEETING IN FOCUS
The dollar is still down nearly 10 percent against the euro so far this year, and is likely to post further losses. The ECB is widely expected to lay the ground for a July rate hike at its Thursday policy meeting this week.
Bullion ignored solid gains in oil prices after OPEC failed to reach a deal to increase output, raising fears of supply shortages later this year. [O/R]
(Graphic on gold-oil divergence: http://link.reuters.com/kam99r)
Gold did not budge after St. Louis Federal Reserve Bank President James Bullard said a U.S. default is the biggest risk facing the global economy. His comments came just hours after Fitch Ratings warned it could slash U.S. credit ratings if the government delays bond payments.
Bullard told Reuters on Wednesday "the U.S. fiscal situation, if not handled correctly, could turn into a global macro shock." [ID:nN08255123]
The Treasury Department says it can stave off default until Aug. 2. Republican leaders, who have said they agree the limit must be raised, say they will not approve a further increase in borrowing authority without steps to keep debt under control.
Gold is likely to be underpinned by safe-haven demand in wake of a possible U.S. default or credit ratings downgrade.
Among platinum group metals, platinum
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