Gold recovered on Saturday after sharp fall of nearly 1% on Friday, as sentiment on the precious metal turned negative after data showed inflation in China accelerated at the fastest pace in seven months in December, dampening hopes for near-term stimulus measures from Beijing. Despite Friday's downbeat performance, futures prices ended the week with a 0.4% gain, the first weekly advance in seven weeks, as indications of improving physical demand for the precious metal in China ahead of the country's Lunar New Year supported gains. Demand from the Asian nation usually picks up before Christmas and lasts through the Lunar New Year in February. China is the world's biggest bullion consumer after India. Futures came under pressure Friday after official data showed that consumer price inflation in China accelerated by 2.5% in December, up from 2% in November and above expectations for a 2.3% increase. Politically sensitive food costs accelerated 4.2% in December from a year earlier. The rise in Chinese food costs was driven by a 14.8% increase in the price of vegetables. In the week ahead, gold traders are expected to remain focused on the outlook for Federal Reserve monetary policy, as well as political developments in the US, with negotiations on raising the US debt ceiling still to come in February. Now technically market is getting support at 30783 and below could see a test of 30776 level, And resistance is now likely to be seen at 30796, a move above could see prices testing 30802.

Trading Ideas:

Gold trading range for the day is 30776-30802.

Gold gains on short covering after prices dropped after growing inflation pressure in China dented hopes for more stimulus.

The metal slid after data showed China's annual consumer inflation rate quickened to a seven-month high of 2.5% in December.

SPDR gold trust holdings dropped by 2.11 tonnes to 1337.73 tonnes.