Today has been another big down day for gold. As if dropping below the psychological $1600 level was not enough, gold seems intent on paying a lingering visit to the mid $1500 range.

Those who entered the market in the last 6-9 months are lamenting their fate. Markets have a habit of finding buyers when they are accelerating upwards. No doubt as gold sped towards $1900 back in August 2011, investors were jumping on in the fear that if they do not get in now, they will miss the boat completely.

Of course we all know what happened next. The big upward surge was followed by an almighty downward correction in which gold toppled over $300 within the space of 3 weeks, representing a shift of over 15% from the peak.

Since then for the last 6 months it has meandered nonchanantly in a long, uninspiring and drawn-out consolidation. A brief rally early in the year was cut short at the $1800 mark.

So where now? Well this is where the battle lines are drawn. The Bears are out and will be revelling in the carnage. (Of course they are the same Bears who said gold would never surpass $1000 but we will overlook such trivialities).

The Bulls amongst us need to stay firm and have belief in the fundamentals that have been driving this secular bull for the last decade.

The keyword here is secular. Secular trends are a phenomena that last for years. They do not turn around on a whim or on short-term cyclical and seasonal patterns. Even the financial debacle of 2008 did not derail the gold bull. Until a secular trend is shown to be broken, it is understood to still be in play.

Chart below shows that we are right at the trendline that has held for the last few years. Gold needs to put a final bottom in and bounce out of this zone.

With the traditionally slow Summer months ahead however, a big move upwards may be unlikely. Still we may yet be in for a real treat. Following the Summer will come the Fall and gold may be lining up for a big seasonal rally out of this quagmire.