Gold yesterday settled up 1.22% at 25981 gained after posting its biggest quarterly fall ever, as bearish economic data from China hurt Asian stocks and boosted bullion's safe-haven appeal. Comments from a US Fed official on the need to maintain the bank's stimulus measures for longer also helped gold recover some losses from last week when it fell 5 percent to three-year lows. Investor confidence in the metal has been eroded after it plunged 23 percent in April-June, as fears over an early end to the Fed's $85 billion monthly bond purchases hurt gold's appeal as an inflation hedge. Meanwhile Outflows from gold backed ETFs have accelerated due to the recent decline in prices. Outflows from SPDR Gold Trust, have totalled nearly 13 million ounces so far this year. Also Hedge funds and money managers slashed their bullish bets in gold futures and options to their lowest levels in six years, as bullion prices fell to a three-year low, a report by the CFTC showed on Friday. While San Francisco Fed Reserve Bank President said on Friday he had backed off from his earlier view that the Fed should start cutting back on stimulus this summer in part because inflation has been lower than he expected. Despite gold prices being close to three-year lows, strong physical demand from India and China has failed to materialize. Technically market is under short covering as market has witnessed drop in open interest by -0.96% to settled at 12437 while prices up 312 rupee, now Gold is getting support at 25679 and below same could see a test of 25376 level, And resistance is now likely to be seen at 26180, a move above could see prices testing 26378.

Trading Ideas:

Gold trading range for the day is 25376-26378.

Gold recovered from lows helped by weakness in the dollar overseas and a pick-up in risk appetite.

Investors continue to shun gold's safe-haven appeal with outflows from gold backed exchange-traded funds hitting a new four-year low.

U.S. manufacturing expanded last month, rebounding from an unexpected contraction in May, and construction spending neared a four-year high in May