Gold settled down -0.67% at 28364 edged lower in the line of expectation as markets braced for the Federal Reserve to begin tapering its USD85 billion in monthly bond purchases by USD10 billion beginning in January. Since the Federal Reserve announced the first tapering of the U. S. monetary stimulus last week after finding the economy strong enough for such action, many gold bulls have fled the precious metal which has been supported for several years by the economic support program. Gold took a beating after the Fed on Wednesday announced that it would reduce its USD85 billion-a-month bond-buying program by USD10 billion in January. While bottom fishing sent gold back up on Friday, investors resumed selling the metal on Monday amid sentiments that 15 months of gold-supporting Fed asset purchases are eventually on their way out. Lackluster data didn't come in soft enough to convince markets otherwise. While Hedge fund managers cut their bullish bets on gold only modestly in the week to Dec. 17, data released on Friday showed. Also Physical bullion held by SPDR Gold Trust rose 5.40 tonnes to 814.12 tonnes on Friday, the first inflow since Nov. 5 in the world's largest gold-backed ETF. But still, SPDR, which accounts for around 40 percent of total ETF holdings, had seen a record outflow of more than 450 tonnes in 2013, bringing gold under its holdings to the lowest level in nearly five years. Outflows from eight top gold ETFs, including SPDR, have totalled about 720 tonnes this year as investors channelled more money to riskier assets such as equities. Technically market is getting support at 28266 and below same could see a test of 28168 level, And resistance is now likely to be seen at 28506, a move above could see prices testing 28648.

Trading Ideas:

Gold trading range for the day is 28168-28648.

Gold dropped as players limited their exposure prior to year-end holidays in a market and facing further downside forecasts for 2014.

The impending tapering of the Federal Reserve's stimulus measures also dimmed gold's allure as a hedge against inflation.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 8.40 tonnes to 805.72 tonnes.