Gold yesterday settled down -0.68% at 27856 dropped in quiet trading on Monday after signs of an improving British business sector and better US manufacturing activities dampened bullion's appeal as an investment hedge. Also rupee strengthened slightly on Monday, recovering from its biggest weekly fall in nearly two years as weaker-than-expected US jobs data boosted Asian risk currencies, while dollar selling by foreign banks also helped. The metal accelerated losses after data showed growth in the US services sector rebounded from a three-year low, while British businesses boomed and activity at euro zone companies expanded modestly in July for the first time in 18 months. While Indian Gold importers stayed on the sidelines for a third straight week due to policy uncertainty on shipments and supporting premiums. To keep a lid on record trade deficit, the RBI tied gold imports for domestic use to exports, helping cut imports available to the local market by 60 percent. The government has also raised the import tax twice in 2013 to 8 percent. June gold imports fell nearly 81 percent to 31.5 tonnes from a record 162 tonnes in May, although FM Chidambaram said recently that imports again rose in July, without giving details. Also Hedge funds and money managers trimmed their gold net longs and raised their bullish position in silver futures and options, a report by the CFTC showed on Friday. Also SPDR Gold Trust, said its holdings fell 0.26 percent to 918.64 tonnes on Friday. Technically market is under long liquidation as market has witnessed drop in open interest by -0.03% to settled at 12196 while prices down -191 rupee, now Gold is getting support at 27687 and below same could see a test of 27517 level, And resistance is now likely to be seen at 28101, a move above could see prices testing 28345.

Trading Ideas:

Gold trading range for the day is 27517-28345.

Gold dropped after better-than-expected U. S. service-sector data released earlier kept expectations alive the economy continues to improve.

Monday's data came on the heels of last week's strong U. S. factory activities and a mixed U. S. nonfarm payrolls report.

Gold also fell as U. S. benchmark 10-year notes yield climbed as traders reduced their bond holdings on surprisingly strong data on the U. S. services sector.