Gold settled up 3.2% at 28496 on safe-haven buying sparked by worries about Portugal's top listed bank, and after India kept record high duties on bullion that could prompt traders who did not buy gold earlier to return to the market. Gold rose on safe-haven demand while, weak euro zone factory data further bolstered the precious metal's appeal.

The parent company of Portugal's largest bank, Banco Espírito Santo, said it missed payments on commercial paper to a few clients, which spooked markets by fueling concerns surrounding the soundness of the banking sectors in Portugal as well as in Spain and Italy. India surprised bullion markets by keeping the import duty on gold and silver unchanged at 10 percent in its fiscal budget, a move likely to limit overseas purchases by the second-biggest bullion consumer and further encourage smuggling.

India's biggest gold trade group had said on Wednesday that the finance minister would likely cut the gold import duty to 6 percent in the newly elected government's first budget presentation. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.23 tonnes to 800.05 tonnes on Thursday. Indian gold imports plunged by a fifth last year though jewellery and investment demand rose 13 percent, causing a spurt in smuggling. The World Gold Council reckons that 200-250 tonnes of gold have been smuggled into India since the imposition of import controls. Technically market is under fresh buying as market has witnessed gain in open interest by 2.57% to settled at 9333 while prices up 883 rupee, now Gold is getting support at 27801 and below same could see a test of 27106 level, And resistance is now likely to be seen at 28890, a move above could see prices testing 29284.

Trading Ideas:

Gold trading range for the day is 27106-29284.

Gold gained amid expectations the Fed will keep rates on hold for an extended period of time after the bank’s bond-buying program ends.

Minutes of the Fed’s June policy meeting released showed that officials agreed to end the central bank’s asset purchase program in October

SPDR gold trust holdings dropped by 0.23 tonnes i. e. 0.03% to 800.05 tonnes from 800.28 tonnes.