Gold settled down -0.47% at 31756 on profit booking after gaining Friday as a big drop in new home sales renewed hopes that Fed will maintain its bond-buying economic stimulus. Sales of new single-family homes in the United States fell more than 13 percent in July to their lowest level in nine months. The Commerce Department data was much weaker than expected, even during a month when Fed stimulus remained in place. Bullion also drew support when three Fed officials expressed divergent views on when to reduce the central bank's $85 billion monthly bond buying. Investors have been trying to predict what will happen at a Fed policy meeting next month. Demand in top buyers India and China has been subdued ahead of the traditional major gold-buying events in Asia, driven by India's Hindu festivals and peak wedding season, and as jewelers start to stockpile ahead of the Chinese New Year. The Commerce Department reported earlier that new home sales in the U. S. tanked 13.4% to 394,000 units in July, far worse than market expectations for a 1.4% decline. The numbers kept expectations going that while the Fed remains ready to begin scaling back the pace of its USD85 billion in monthly asset purchases this year, a start date may come later such as in December as opposed to September. While SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.72 percent, or 6.61 tonnes, to 920.13 tonnes on Friday. Also Hedge funds and money managers boosted bullish bets in gold futures and options to their highest level since early February, buoyed by the uncertain timing of the Fed's planned unwinding of its bond-buying stimulus, a report by the CFTC showed on Friday. Technically market is getting support at 31676 and below same could see a test of 31595 level, And resistance is now likely to be seen at 31886, a move above could see prices testing 32015.

Trading Ideas:

Gold trading range for the day is 31595-32015.

Gold dropped on profit booking after gaining Friday as a big drop in new home sales renewed hopes that Fed will maintain its bond-buying economic stimulus.

Bullion also drew support when three Fed officials expressed divergent views on when to reduce the central bank's $85 billion monthly bond buying.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.72 percent, or 6.61 tonnes, to 920.13 tonnes.