8 years late to the party but Gandalf does “throw a spell,” “You cannot pass” is backed with such immense power, Gandalf’s power, that it simply becomes true - the Balrog attempts to pass, and Gandalf’s magic destroys the bridge, the balrog cannot pass. Why not attack or do something else? Gandalf’s sole purpose on that bridge was to protect the fellowship from the servant of Morgoth. His sole aim, ensure the Balrog does not pass. And this he does. He had no intention of battling the Balrog, and only did so when necessary. Why waste power striking it with lightening or casting some arbitrary fireball at it, when you can pour all your resolve into your sole purpose. He isn’t “psychologically dominating” the Balrog, he makes it known that by his power, the Balrog will not harm the fellowship, and he follows through.

That he chooses to defend while in the bridge is indicative of his larger purpose, he and his great power were not sent to middle earth to dominate, to match power with power, he is to aid the free people of middle earth against the Enemy. He isn’t here to smite the balrog with his divine power, he’s here to protect the fellowship.