Gold dropped approximately 12 per cent to US$1,377 per ounce between April 11 and 16.
The severity of the fall has caused many investors to question if the market is turning bearish and if one should change one's portfolio accordingly.
Evy Hambro, chief investment officer of BlackRock's natural resources team, said the drop was due to speculative investors.
"In essence, what we have seen here is the outflow of the 'hot money' that was in the market," Mr Hambro said.
In the future he did not see much more "forward selling".
"In terms of the overall role of gold in the portfolio as a long-term play, the fundamental drivers have not changed," he said.
BlackRock advocated maintaining gold holdings and said it recently put some cash to work "to take advantage of the low price".
However, Wealth Within chief analyst Dale Gillham was critical of speculative traders looking to jump in and profit from the recent falls. He said his first instinct would be to trade short.
"When markets or stocks fall rapidly, often speculators jump in to buy, hoping for a rebound whilst others try and grab a bargain and in my opinion, both are extremely dangerous practices," he said.
This is not following the trend of gold, which Mr Gillham said is due for further corrections.
Much of the price of gold depends on how investors would look to reallocate their portfolios.
The Dalton Nicol Reid investment team pointed out there is a danger if investors become more conscious of the fact gold does not produce any yield. This could cause a "drive into equities or infrastructure".
In essence, the severity of the drop and the bullish prior run of gold have caused a serious divergence in investor opinion as to whether gold is at fair value, or if it is overpriced.
