Gold Plunges 4.3 Percent

Gold prices dropped like so much lead today. There were lots of reasons for the drop ... but the big plunge came right after the head of the U.S. central bank started testifying before Congress. He painted a negative picture of the economy ... but hinted that the Federal Reserve would hold off for now on expanding the money supply.

Gold prices also came under pressure since this is the end of the month ... there were a high number of fund redemptions that forced fund managers to sell.

Another reason gold fell today is because it couldn't break through the $1,800 per ounce level. Once it became clear that the yellow metal wasn't going to top $1,800 ... a number of traders and investors sold off. It was especially easy to do that since gold has climbed more than 15 percent since the last eight weeks. For people who are happy to get close to 10 percent a year growth in their investments this was a chance to close out the books for 2012 and start a nine month vacation.

There was one more reason gold fell and that had to do with the fact that the euro lost value and the dollar gained value. Gold has been tracking the euro lately ... in part because when the euro rises the dollar falls ... and a weaker dollar makes gold less expensive for people who use non-U.S. currencies.