Gold on Monday declined on speculation Europe's debt crisis will strengthen the dollar, curbing demand for the metal as an alternative investment.
Gold fell 0.3 per cent to $1,584.20 an ounce and silver by 0.7 per cent to $27.14 an ounce.
The euro fell to near a two-year low versus the dollar after German Chancellor Angela Merkel said she hasn't softened her stance on measures to stem debt contagion that has prompted five euro states to seek international aid.
Federal Reserve Chairman Ben S Bernanke will discuss the outlook for the economy and monetary policy in testimony to the US Senate Banking Committee tomorrow. Hedge funds and other money managers cut their bets on higher gold prices by 18 per cent in the week ended July 10, US Commodity Futures Trading Commission data show.
Bernanke has said that policy makers will be prepared to take additional steps if necessary, including more asset purchases.
