Gold yesterday settled down -0.62% at 26559 after better-than-expected US housing, confidence and factory reports sent investors chasing the dollar amid sentiments that the Federal Reserve is closer to scaling back stimulus programs that weaken the dollar to spur recovery. Investors resumed selling gold and continued their shift to equities and other more risky assets after better-than-expected durable goods data. The positive data brought an end to gold's earlier gains after China's central bank made assurances about liquidity risks. Rising optimism on the strength of the US economy also boosted the dollar. Also Morgan Stanley, Credit Suisse and Deutsche Bank all cut their gold forecasts, after similar moves earlier in the week from HSBC, Goldman Sachs and UBS. Credit Suisse cut its gold price forecast for 2013 to $1,400 an ounce from $1,580 an ounce, while Deutsche Bank cut its price view by 6.8% to $1,428 an ounce and Morgan Stanley reduced its forecast to $1,313 from $1,409. The Fed's QE measures, put in place to stimulate growth, have helped to drive gold to record highs in recent years by keeping interest rates low while stoking inflation fears. Investor appetite for bullion has faded, with the world's largest gold-backed ETF - New York's SPDR Gold Trust - reporting another 4.2 tonne outflow on Monday. Technically market is getting support at 26455 and below same could see a test of 26352 level, And resistance is now likely to be seen at 26718, a move above could see prices testing 26878.

Trading Ideas:

Gold trading range for the day is 26352-26878.

Gold dropped as worries persisted over an early end to U. S. monetary stimulus measures and a cash crunch in China.

Bullion had edged higher earlier after two top U. S. Federal Reserve officials downplayed an imminent end to monetary stimulus.

But a lack of strong buying interest and continued uncertainty pulled prices down.