Gold yesterday settled up 1.51% at 28705 as support seen after Rupee fell below the key psychological level of 60 to the dollar to a three-week low, posting its biggest fall in a month, as the central bank kept interest rates on hold and failed to announce any additional steps to defend the currency. While Gold prices on COMEX moved lower as investors avoided the metal and remained parked in the dollar to await the Fed's decision on monetary policy, with many hoping the US central bank will provide some clue as to when it may begin tapering stimulus programs. Markets were quiet as investors remained on the sideline to see if the Fed makes any indication over when stimulus programs will end. Stimulus programs such as the Fed's USD85 billion monthly asset-purchasing plan tend to weaken the dollar to spur recovery, making gold an attractive hedge. Data released earlier Tuesday depicted a US economy on the mend though doubts if recovery is going strong enough to prompt the Fed to wind down stimulus measures kept investors camped out in the dollar until the Fed's decision becomes public. Yesterday's data missed market expectations, the numbers were strong enough to boost hopes for a more robust and sustained US economic recovery, which gave the greenback some support and softened gold. The metal has fallen more than 20% this year on fears of an end to easy central bank money and sharp outflows from gold-backed ETF. India's imports of gold have halted since July 22, sending premiums for scarce stocks soaring, as traders try to puzzle out new central bank rules that tie imports to export volumes. Technically market is getting support at 28264 and below same could see a test of 27822 level, resistance is now likely to be seen at 28959, a move above could see prices testing 29212.

Trading Ideas:

Gold trading range for the day is 27822-29212.

Gold gained as weakness in rupee supported prices amid growing uncertainty over the future of the central bank's monetary stimulus

Fed had previously said it would likely begin reducing its stimulus later in 2013 and halt it altogether by mid-2014

In addition to the Federal Reserve, the European Central Bank and the Bank of England also hold policy reviews this week.