Gold in midst of historic plunge

Gold prices plunged 9 percent Monday, losing $128.50 to $1,366.50 per troy ounce on the Comex division of the New York Mercantile Exchange. Analysts are saying gold pricing, in the midst of its largest two-day drop in Comex history, is in the middle of a perfect storm with fundamentals lined up against it. Investors turn to gold as a hedge against inflation and inflation is holding low enough to take that motivation off the table. Gold is also bought when equity markets are faltering and equities have enjoyed a dramatic recovery since the first of the year when fears of the fiscal cliff abated. In addition, officials in Cyprus have said the island nation could sell some of its gold reserves to pay for its share of a massive bank bailout. That would flood the market with available gold, which would put pressure on prices. On Friday, the price of gold fell more than 4 percent with a drop of $79.30 to $1,485.60 per troy ounce in New York. Gold on Friday fell to 21.3 percent below its August 2011 record of $1,888.70 per ounce. That puts the precious metal in a bear market, which is commonly defined as a 20 percent correction from a recent peak.