Gold drops 2% as safe haven demand diminishes
Gold prices dropped about 2% on Monday as safe haven demand diminished due to easing tensions in the Middle East, alleviating fears of conflict escalation.
Traders took profits in part after gold consistently struggled to maintain gains above the psychological $2400 level, resulting in a potential bull-trap pattern forming on the daily chart.
New bearish momentum is pressuring the initial pivot point at the $2320 zone (recent range floor and Fibonacci 23.6% retracement of the $1984/$2431 rally). A break below this level would reinforce early negative signals (the price has fallen below the 10-day moving average and is sharply losing bullish momentum) and allow for a deeper pullback.
The psychological $2300 level and Fibonacci 38.2% retracement at $2260 are the next significant support levels. The latter serves as a key support that should contain any extended dips, marking a healthy correction that won’t compromise the broader bullish trend.
In contrast, a decisive break below the $2260 pivot would undermine the bulls and shift the near-term focus to a downward trend.
