Gold opened steady this morning before plummeting more than $70 per ounce in late morning trading. Silver’s correction lagged behind by about 30 minutes, but soon caught up as the metal shed nearly $2.50 per ounce. All of this happened in less than an hour.

The downturn came amid a convergence of three different drivers that all turned negative at once. Fed Chairman Ben Bernanke spoke to congress this morning and intimated that the increase in employment figures may relieve some pressure on the Fed to conduct another round of quantitative easing, some of which may have been priced into the gold market. He also mentioned the threat of short term inflation due to rising gasoline prices. This too discredited the argument that QE3 is on the way, and helped bolster the dollar which had fallen off of recent highs.

At the same time, the European Central Bank pumped over $700 billion into the euro zone economy through its loan program, significantly expanding its balance sheet. With the ECB continuing to expand its accommodative monetary policy while its counterpart here in the US signaled a less accommodative stance, the euro tanked against the dollar which put significant sell pressure on gold.

It’s also worth noting that gold has run up significantly in the last 60 days with essentially no profit taking to speak of. The fact that today marks the last trading day of the month has triggered some profit taking, magnifying the effects of the selloff. Still, don’t expect gold to hang around at these low levels for long.

The significant technical support at $1720 has held strong after multiple tests earlier this month. There has been so much buy interest in the low $1700’s as to create one of the stronger technical floors we have seen in over a year. This is not to mention the fact that many of the larger short positions were squeezed out of the market over the last couple months as prices moved steadily upward. Gold needed a profit taking correction after months of strong gains, but this is probably too much, too fast.

It’s also worth mentioning rumors that Brazil has devalued its currency this morning in an attempt to make exports more competitive after months of an unusually strong Real. If this is true, it could pressure Brazil’s major trading partners to respond by pushing their currencies lower to match the revalued Real. Suffice to say that though the dollar is strong at the moment, but the longer term trend is still very much intact. We will know more as the trading day unwinds, but this may be one of the last opportunities to buy gold below $1720 an ounce for some time.

Mike Getlin is Executive Vice President of Merit Financial, home to America's fastest growing physical gold IRA company. Please send comments or questions to