Gold plunges to lowest in more than two years

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Associated Press

Posted on April 15, 2013 at 8:01 AM

Updated Monday, Apr 15 at 8:01 AM

The price of gold is plummeting to its lowest level in more than two years.

The precious metal extended its decline after plunging on Friday, when the U.S. government reported that wholesale prices fell in March by the most in 10 months. Investors tend to buy gold when they expect inflation to increase. Any indication that prices aren't rising prompts investors to sell gold.

A proposal that Cyprus sell some of its gold reserves to support its banks has also rattled the market. Traders worry that Spain, Italy and other weak European countries might do the same.

The price of gold plunged $100, or 7 percent, to $1,398 an ounce as of 10 a.m. EDT Monday. The price of the metal has dropped 10 percent in the last two days.

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