Gold settled up 2.93% at 27611 posted its biggest jump since September on Thursday, as technical buying picked up on tensions in Iraq and supported by the Federal Reserve's lack of commitment to raise interest rates. The Federal Reserve said it was leaving its benchmark interest rate unchanged at 0.00-0.25% but said it would cut its monthly bond-buying program to $35 billion from $45 billion due to an improving economy. Fed bond purchases support gold by weakening the dollar, as the two assets tend to trade inversely with one another, and news of their dismantling often weakens the yellow metal. Still, the Fed gave little indication as to how much time will elapse when bond purchases end and rate hikes begin, and after digesting the Fed's language, markets concluded that borrowing costs will remain low for the foreseeable future. Low interest rates usually benefit gold, as they weaken the dollar and thus boosts the precious metal's appeal as an alternative asset and make dollar-priced commodities cheaper for holders of other currencies. Separately, concerns the U.S. will get involved in Iraq's violent insurgency boosted gold's appeal as a hedge as well, as disruptions to Iraqi oil shipments could hike gasoline prices and weigh on U.S. recovery. Fighting between Iraqi security forces and Sunni insurgents continued on Thursday, while U.S. President Barack Obama said he stood ready to take "targeted and precise" action to control the violence, while reports that Iran is ready to battle the insurgency sparked fears of a civil war. Technically market is under short covering and getting support at 27057 and below same could see a test of 26502 level, And resistance is now likely to be seen at 27910, a move above could see prices testing 28208.

Trading Ideas:

Gold trading range for the day is 26502-28208.

Gold rose as the Federal Reserve's lack of commitment to raise interest rates and continued tensions in the Middle East unleashed a wave of short covering.

The Fed statement and geopolitical tensions sparked a frantic reversal in market sentiment.

Lower U.S. 2014 growth forecast by the Fed and lingering geopolitical tensions in Iraq and Ukraine rekindled investors' interest in gold