Spot gold shed $US80 to $1704 an ounce in less than 90 minutes in overnight trade before closing at $1696.85/oz, almost 5% lower.

The plunge came after Bernanke gave no indication that the US central bank was considering additional measures to help spur the economy.

Bernanke described “positive developments” in the labour markets but said it “remains far from normal”, according to Bloomberg.

He said a recent rise in gasoline prices “is likely to push up inflation temporarily” and reduce consumer purchasing power.

Bernanke’s comments caused the US dollar to soar as much as 0.8%, eroding investors appeal for the precious metal.

Earlier in the session, gold had been trading as high as $1790/oz and was set to test the $1800/oz mark.

However, spot gold has rebounded slightly in morning trade, up $16.50 to $1713.45/oz.

Gold stocks on the Australian Securities Exchange followed the precious metal lower.

Newcrest Mining was trading A75c lower at $32.74, Eldorado Gold Corporation was down 10c to $14.33, Alacer Gold Corporation fell 15c to $8.97 while Evolution Mining dipped 6c to $1.95.