Gold settled flat as a firmer dollar prompted buyers to take to the sidelines after the metal's biggest one-day price rise in over a year. Gold had already started to rise on assurances from the U. S. Federal Reserve last week that any tapering of its quantitative easing policies, fears of which drove gold sharply lower in June, would depend on data. Sentiment remained supported amid easing concerns over the possibility the Federal Reserve will begin to taper its bond-buying program in the near future. Disappointing U. S. housing data on Monday also contributed to gains, as it dampened expectations that the Fed will start scaling back its asset purchase program this year. The precious metal rallied 3 percent on Monday as a break of technical resistance at $1,300 and then at $1,322 prompted dealers holding short positions, or commitments to sell at a certain price, to close out those bets. Consumption in the world's number one gold buyer, India, is expected to be cut by fresh moves by India's central bank on Monday to tighten gold imports, making them dependent on export volumes. Dealers said, however, that demand from China has been "quite healthy", pointing to elevated premiums on the Shanghai Gold Exchange. Shanghai gold is about $20 an ounce more expensive than London spot prices. Technically market is under short covering as market has witnessed drop in open interest by -0.07% to settled at 12811 while prices up 14 rupee, now Gold is getting support at 27462 and below same could see a test of 27350 level, And resistance is now likely to be seen at 27677, a move above could see prices testing 27780.

Trading Ideas:

Gold trading range for the day is 27350-27780.

Gold settled flat as a firmer dollar prompted buyers to take to the sidelines after the metal's biggest one-day price rise in over a year.

Consumption in India is expected to be cut by fresh moves by India's central bank to tighten gold imports.

Outflows from gold ETFs, which issue securities backed by physical stocks of bullion, have averaged 20 tonnes a week this year.