Gold sinks below $1,200, lowest in 3 years

The price of gold is slumping below $1,200 an ounce, the lowest in more than three years, after the Federal Reserve pulled back on its stimulus program.

Gold plunged $41.40, or 3.4 percent, to $1,193.60 an ounce Thursday. It hadn’t closed below $1,200 an ounce since August 2010.

Gold went as high as $1,900 an ounce in August 2011 as traders feared that the Fed’s efforts to support the U.S. economy with easy-money policies would cause inflation. That never happened.

The latest plunge came a day after the Fed said it would reduce its bond purchases next month, further dissipating concerns about inflation.

The price of silver also fell sharply. The March contract fell 87.3 cents, or 4.4 percent, to $19.186 an ounce.