Hopes were dampened after Bernanke did not hint on quantitative easing, or "QE3", in which a central bank buys assets from banks with electronically-generated cash to pump liquidity into the economy.
Dollar gained in strength against euro and other major currencies, which made investors shift focus from gold to the dollar. Historically, gold and dollar share an inverse relationship with each other and the sudden spike in dollar weighed on gold.
International gold fell more than 5% to hit a low of $1,688.44 ounce, after trading higher at $1,791.49 an ounce.
Globally, investors are reducing exposure to their gold holdings with a view that gold is no more able to offer stellar returns.
Gold recovered on MCX in the morning session by Rs 24 to trade at Rs 27,976 per 10 grams. Gold nearly lost Rs 900 in yesterday's trade. Silver which lost around Rs 2000 per kgs gained Rs 287 in morning traded at Rs 58,070 per kgs.