Gold settled up 0.21% at 27261 recovered from the day's low as support seen from the Rupee's biggest single-day decline in more than a month as investors covered short dollar positions following a Federal Reserve study, while losses in the domestic share market also hurt sentiment. While pressure seen in the earlier trades as Comex Gold fell below $1,250 an ounce on Tuesday, as technical selling and speculation that the U. S. Federal Reserve and other central banks would hike interest rates earlier than expected sent prices to a three-month low.

Commodities were broadly under pressure as the dollar rose to a 14-month high against the euro on optimism the U. S. economy is growing in line with expectations that the U. S. central bank may begin raising interest rates next year. While Investors fear strong economic data could prompt the Fed to raise rates sooner than expected. Higher rates would dull the appeal of non-interest yielding assets such as bullion. Easing geopolitical tensions over the Ukraine crisis also curbed some safe-haven appetite for gold.

A ceasefire between Ukraine and pro-Russian rebels was agreed on Friday, part of a peace plan meant to end a five-month conflict that has killed more than 3,000 people and caused the sharpest confrontation between Russia and the West since the Cold War. But caution persisted as the military said five Ukrainian servicemen have been killed in the past four days, underscoring strains in the ceasefire. Technically market is under short covering as market has witnessed drop in open interest by -0.98% to settled at 10303 while prices up 57 rupee, now Gold is getting support at 27152 and below same could see a test of 27042 level, And resistance is now likely to be seen at
27376, a move above could see prices testing 27490.

Trading Ideas:

Gold trading range for the day is 27042-27490.

Gold still under pressue as speculation over an early U. S. interest rate hike strengthened the dollar and dulled bullion's appeal.

Rupee dropped as investors covered short dollar following a Fed study, while losses in the share market also hurt sentiment.

Bright U. S. economic data has given the Fed a reason to raise interest rates, leaving gold speculators with no choice but to sell.