Gold rebounds toward $3400 supported by ascending trend line

Last week, gold prices hit a new monthly high, testing the $3,430 level before pulling down. The pullback, however, found a solid foundation at the medium-term ascending trend line, where buyers were actively accumulating positions at favorable terms. This key trend line continues to serve as a strong support, reinforcing the potential for another upward push to $3,400 or $3,430 resistance levels.

The 50-day moving average, which now coincides with the rising trend line, further strengthens the chances of a rebound. In recent months, any dips below this level have been quickly bought up, typically within the next trading session. Although gold has not surpassed its all-time highs from April, bearish momentum is limited to short-lived downward spikes. The metal’s resilience stems from its fundamental appeal as a safe-haven asset.

Monday's trading session underscores this dynamic. Despite the newly signed US-EU commercial deal, which would typically dampen demand for defensive assets, gold has held steady. The unresolved US-China trade dispute continues to loom large, with officials from both sides meeting today in Stockholm. Bloomberg sources claim that a breakthrough agreement appears unlikely. Instead, negotiations could extend another three months, thus prolonging market uncertainty—a scenario that favors the metal’s role as a hedge against volatility.

Recent data from the China Gold Association (CGA) underscores the enduring popularity of bullions. In the first half of the year, demand for bars and coins surged by 23.7%, reaching over 264 tons. Although high prices caused a 26% drop in jewelry consumption, this fall was offset by strong market activity, including direct investor purchases, ETF inflows, and continued reserve accumulation by the People's Bank of China (PBoC). 

On the daily chart, the Stochastic Oscillator is nearing oversold territory, hinting at a potential buy signal in the near future. If bullish momentum returns, the primary upside targets will be the key resistance levels at $3400 and $3430.

Here's a trading strategy to consider:

Buy gold at the current price. Take profit 1: $3,400. Take profit 2: $3,430.Stop loss: $3,280.