Gold settled up 0.77% at 26831 rallied near to 3-week high as escalating tensions in Iraq attracted some safe-haven bids, but investors were awaiting a Fed meeting this week before taking any big positions. US Industrial production number for May rose 0.6%, topping expectations, a report from the Fed showed. New York regional manufacturing activity held near a 4-year high in June, beating forecasts by ticking higher to 19.3 from 19.0 in May. Confidence among home builders increased in June to the highest level since January, according to the NAHB. Sentiments remain bullish for bullion as support seen from news that Iraq would require “military action from the U.S. Also the data calendar is relatively full this week, with the Fed’s decision on interest rates providing the highlight on Wednesday. Markets are on the watch for any signals on when the U.S. central bank might begin raising interest rates. Investors often turn to gold as a safe haven in times of political uncertainty. So far this year, gold has failed to maintain gains despite heightened geopolitical tensions, however. Gold's initial gains were also boosted by developments in Ukraine, where pro-Russian separatists shot down a Ukrainian army transport plane. Concerns over the ongoing Sunni insurgency in Iraq continued to weigh on the dollar, as escalating conflict could dampen global recovery, especially if the conflict disrupts Iraqi oil exports and waters down the economy. Also prices could be pressured by outflows from the SPDR Gold Trust, which saw holdings fall 4.20 tonnes to 782.88 tonnes on Monday. Technically market is under short covering and getting support at 26643 and below same could see a test of 26454 level, And resistance is now likely to be seen at 27028, a move above could see prices testing 27224.

Trading Ideas:

Gold trading range for the day is 26454-27224.

Gold ended with gains getting support from geopolitical issues, but any macroeconomic improvement could cap rallies.

Concerns over the ongoing unrest in Iraq continued to weigh on the dollar, as escalating conflict could dampen global recovery.

SPDR gold trust holdings dropped by 4.20 tonnes i.e. 0.53% to 782.88 tonnes from 787.08 tonnes.