Gold prices took a hit today, dropping by $40 after a brief rally that had investors hopeful. The drop has reignited concerns about the chart pattern that has been forming in the gold market.

Over the past two months, gold has been showing signs of forming a head-and-shoulders top, a pattern that typically indicates a reversal in trend and could potentially lead to a target price of $2150. Despite this bearish pattern, yesterday saw a surge in buying activity as the bulls attempted to push prices above the late-May highs. Unfortunately, their efforts fell short and today, the sellers came back in full force, causing gold prices to plummet to $2318.

Although the head-and-shoulders pattern may not be a perfect textbook example, it is still a cause for concern, especially in light of recent data showing that the US service sector is not slowing down. In fact, the S&P Global services PMI rose to a 26-month high, indicating a strong and growing economy. This could potentially deter the Federal Reserve from implementing any rate cuts this year, which in turn, may lead to aggressive profit-taking in the gold market.

Investors and analysts will be keeping a close eye on how the gold market reacts in the coming days. If the head-and-shoulders pattern continues to play out, we may see further downside in gold prices. On the other hand, if there is a strong pushback from the bulls, we could see prices stabilize and potentially even reverse course.

It is important for investors to stay informed and monitor the latest developments in the gold market, as these can have a significant impact on their investment decisions. As always, it is crucial to have a diversified portfolio and to consult with a financial advisor before making any major investment moves.