It’s been a dismal week for precious metals, as gold, silver, platinum and palladium all dropped precipitously. The correction began on Wednesday of last week after Ben Bernanke’s testimony to Congress. But it wasn’t what the Fed Chairman said that spooked precious metals traders, but rather, what he didn’t say.

“When Bernanke didn’t mention the possibility of another round of [quantitative easing], that was enough to take the fizz out of everything,” said Dennis Gartman. “Before [the testimony], gold was looking quite strong, but [afterward] it just gave up the ghost.”

The implication is of course, that gold had been pricing in more stimulus — such as a third round of quantitative easing (QE3) from the U.S. central bank. Yet that may not have been the case.

“Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand,” said Morgan Stanley. “Bernanke’s testimony [last week] did nothing to remove this benefit.”

“Under these circumstances, QE3 would have been icing on the cake for the monetary easing trade, but not the fundamental driver of bullish investor positioning,” the bank concluded.

Indeed, as of the close of Monday, exchange-traded fund holdings of gold totaled a record 77.4 million troy ounces, indicating that at least one segment of investor demand for the yellow metal remains strong.

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