Gold on MCX settled up 0.18% at 28791 as prices pared some of its gains as data showing the biggest pick-up in U.S. consumer prices in 2-1/2 years lifted the dollar and U.S. Treasury yields. With the U.S. economy close to full employment and inflation headed toward the Federal Reserve's 2 percent goal, it "makes sense" for the U.S. central bank to gradually lift interest rates, Fed Chair Janet Yellen said. The U.S. central bank should be able to raise rates "in a gradual and patient manner," Dallas Fed President Robert Kaplan said. U.S. consumer prices increased in December as households paid more for gasoline and rental accommodation, leading to the largest year-on-year increase in 2-1/2 years and signaling that inflation pressures could be building. With euro zone growth and inflation slowly picking up pace, the European Central Bank is set to argue on Thursday that its extra-easy policy stance is still needed to keep the recovery on course. Economic growth continued at modest pace across most of the United States, but several districts report disappointing sales over holidays, the Federal Reserve's Beige Book said. In a sign of changing consumer habits, reports in more than one District suggested that growth in e-commerce had come at the expense of bricks-and-mortar retailers. While retailers were mixed, manufacturers report increased sales, a turnaround from early 2016. Technically market is under short covering as market has witnessed drop in open interest by -1.17% to settled at 7118 while prices up 53 rupee, now Gold is getting support at 28703 and below same could see a test of 28614 level, And resistance is now likely to be seen at 28853, a move above could see prices testing 28914.

Trading Ideas:

Gold trading range for the day is 28614-28914.

Gold pared some of its gains as data showing the biggest pick-up in U.S. consumer prices in 2-1/2 years lifted the dollar and U.S. Treasury yields.

Federal Reserve Chair Janet Yellen advocated lifting U.S. interest rates gradually.

The U.S. central bank should be able to raise rates "in a gradual and patient manner," Dallas Fed President Robert Kaplan said.