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Gold falters on the day despite the risk mood looking more defensive, as the focus is now on plunging oil prices once again. Stocks are down, bonds are bid and so is the yen and dollar so far in European trading.

Are liquidation trades back on the menu? It's still too early to say in my view.

In any case, the drop in gold is bringing the focus to the key near-term support region around $1,672 to $1,679. The lows seen earlier in the week as well as the 38.2 retracement level make up this region and is a key test for sellers right now.

The near-term bias is keeping more bearish as price action sits below both key hourly moving averages (with the potential of a crossover between the 100 and 200-hour MAs).

But if gold is to track lower towards further support nearer to $1,650 next, the above region needs to be taken out on a daily move.

Reference: ForexLive