Do you use colorblind mode? It's hard to tell which color is which.
Anyway, I was also mistaken with the functionality of the loot goblin because I encountered him mostly in the Summit.
The loot goblin is, for all purposes, a moving open-world loot chest: what it drops is exactly what you'd find in an open world random chest, so it's not influenced by the world difficulty at all.
Only in the Summit it will drop all high rolled gear, because all the chests in the Summit are treated as mission chests, so they roll at difficulty level.
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