Gold fell below $1,600 an ounce to settle at the lowest level in five months as a stronger dollar curbed demand for the metal as an alternative asset. Silver, platinum and palladium also slumped. On Mcx also we have seen the sharp fall by almost -2.44% to settled down at 28183 despite of rupee weakness initially supported the prices a lot. The dollar rose to an 11-month high against the euro on signs of increased funding stress as Europe battles to tame its debt crisis. Gold closed below its 200-day moving average today, signalling prices may drop to $1,460 as per chart pattern, margin requirement may potentially prompting margin calls in next 2 session. Increased Italian borrowing costs forced the greenback to 11 month highs against the euro, while the Fed reported the US economy is growing, negating any need for further stimulus. Fears of decreased demand for precious metals also added to the bearish sentiment. For much of the last year, investor's typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unravelled recently. Instead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the US dollar. Now technically market is trading in the range as RSI for 18days is currently indicating 42.84, where as 50DMA is at 28535 and gold is trading below the same and getting support at 27757 and below could see a test of 27332 level, And resistance is now likely to be seen at 28709, a move above could see prices testing 29236.

Trading Ideas:

Gold trading range is 27332-29236.

Gold fell as a stronger dollar curbed demand for the metal as an alternative asset

Fears of decreased demand for precious metals also added to the bearish sentiment

The dollar rose to an 11-month high against the euro on signs of increased funding stress as Europe battles to tame its debt crisis