Gold tumbles down to $1,277, fully reversing the gains – levels to watch

The price of gold is dropping sharply to around $1,277, around $8 on the day and falling back to levels that were seen last week. The sell-off in the precious metal is not correlated to any other market movement. American and British traders return to their desks after a long weekend.

XAU/USD dropped below the 50 and 100 Simple Moving Averages on the four-hour chart but momentum remains positive. The Relative Strength Index is leaning lower -- but also holds above 30, not reflecting oversold conditions.

Support is seen at $1,277 which provided some support last week, followed by $1,268 which was a swing low and then by $1,266, the lowest in May. Resistance is seen at $1,283 (recent swing high), $1,290 (mid-May swing high) and $1,308, the highest level this month.