Gold Prices Plunge Amid Rising Oil Costs and Inflation Fears

Gold prices plummeted over 3% on Monday following President Trump's rejection of Iran's proposal for easing tensions in the region, leading to a sharp increase in oil prices and fueling inflation fears. This development has bolstered expectations of a more aggressive Federal Reserve stance on interest rates.

The sharp decline sent gold prices tumbling to their lowest level in nearly two months, marking the biggest daily loss since August 28. The bears' dominance continued as they broke below the pivotal $4630 zone, which had previously served as a higher base and a Fibonacci 61.8% retracement of the rally from $3942 to $4697.

The breakdown of this key level, combined with the violation of the ascending and thickening daily Ichimoku cloud, has turned technical studies into a full bearish configuration, adding to increasingly negative fundamentals. Bears now have their sights set on initial targets at $4120 (Fibonacci 76.4%) and $4100 (a round figure), with the violation of these levels potentially unmasking psychological support at $4000.