Gold settled down -0.43% at 27934 after better-than-expected US reports on jobless claims and factory activity boosted hopes that the US economy is on the mend and will no longer require the support of Fed stimulus measures. Monetary stimulus programs, such as the Fed's monthly asset purchases totaling USD85 billion, drive down longer-term interest rates to spur recovery, which weakens the dollar and makes gold an attractive hedge. Talk of an eventual end to stimulus tends to strengthen the dollar, which often comes at gold's expense. In the US earlier, the ISM said its widely-watched PMI rose to 55.4 in July from 50.9 in June. The numbers strengthened the greenback by keeping expectations alive that the Fed remains on track to winding down stimulus measures beginning this year and ending them next year and let the economy stand on its own two feet. Better-than-expected data out of the labor market also fueled such sentiments. Meanwhile, gold did see some support after ECB President Mario Draghi said that the central bank's monetary policy will remain accommodative "for an extended period of time." The ECB held its benchmark interest rate at a record low 0.50% in August, in line with expectations, which made gold attractive in the eyes of those concerned with the single currency's strength. On a more positive note for gold, holdings of the world's largest bullion-backed ETF, SPDR Gold Shares, were unchanged for a fifth day on Wednesday. Gold ETFs have recorded outflows of nearly 600 tonnes of metal this year, helping push prices down more than 20 percent. In top buyer India, gold imports have come to a halt due to uncertainty in import policy, keeping premiums high at around $45 an ounce over London prices. Technically market is getting support at 27746 and below same could see a test of 27558 level, And resistance is now likely to be seen at 28136, a move above could see prices testing 28338.

Trading Ideas:

Gold trading range for the day is 27558-28338.

Gold dropped after ECB chief said euro-zone interest rates will remain low for an extended period of time.

ECB President Mario Draghi confirmed that interest rates would remain at present or lower levels for an extended period of time.

Federal Reserve gave no indications on whether it will begin to taper its stimulus program in the near future.