Gold yesterday settled up 0.22% at 27952 after the dollar fell amid a volatile trading session marked by uncertainty over the fate of US monetary policy. Gold dropped in the earlier session as rupee rallied snapping a five-session losing streak, as an upgrade by Fitch Ratings helped calm investor nerves after a series of record lows were hit in recent sessions on the back of massive debt outflows. But better investment demand, reflected by the absence of fresh outflow from the world's largest gold-backed exchange-traded fund SPDR Gold Trust, also boosted bullion investor sentiment. Pressure mounted this week after lack of new economic stimulus from the BoJ fueled worries that other central banks may also withdraw their support, denting bullion's inflation-hedge appeal. While volatility in financial markets may continue until the Fed's meeting next week and an accompanying statement from Bernanke on Wednesday. By Wednesday, stocks and the dollar recovered though briefly and the volatility made gold an attractive hedge against roiling currencies. The Fed is currently buying $85 billion in bonds a month from banks, a monetary policy tool known as quantitative easing that weakens the dollar to spur recovery, with gold prices rising as a side effect. The US will release weekly data on initial jobless claims on Thursday as well as official data on retail sales, which investors were hoping will provide a more readable weather vane for the markets, though until then, a volatile dollar bolstered gold. Technically market is now getting support at 27703 and below same could see a test of 27454 level, And resistance is now likely to be seen at
28099, a move above could see prices testing 28246.

Trading Ideas:

Gold trading range for the day is 27672-28412.

Gold gains as sharp losses in U. S. equities and a drop in the U. S. dollar prompted the metal to rebound from lows.

BoJ's decision to leave its policies unchanged spooked investors already worried the U. S. FED would soon curb its bond-buying programme

India's official that government did not need to act to further to moderate gold imports because recent steps already had considerable impact.