Silver Drops Nearly 5% as Gold Pulls Back

Gold and silver prices have cooled in recent days following a strong rally, a move that reflects stretched positioning rather than a deterioration in the broader outlook, according to eToro.

“After sharp rallies, periods of profit-taking and consolidation are normal, particularly when retail participation increases and short-term sentiment becomes crowded,” said Zavier Wong, Market Analyst at eToro. “Retail flows tend to amplify moves in both directions, which can exaggerate pullbacks even when longer-term drivers remain intact.”

The recent weakness appears largely driven by profit-taking and positioning unwinds. A firmer US dollar and rotation back into equities have also weighed on prices, as investors reassess near-term inflation risks, US policy signals, and ongoing geopolitical uncertainty.

Looking ahead, prices may remain volatile in the near term as markets reset, especially with gold appearing technically overbought after its rapid rise. However, Wong noted that pullbacks do not automatically invalidate the broader case for holding exposure. “We are already seeing prices rally again, with gold topping USD 5,000 per ounce once more. Persistent geopolitical tensions and macro uncertainty continue to support demand for precious metals, which are increasingly viewed as portfolio insurance rather than short-term trades.”

Silver has followed a similar path, though with greater volatility. Its recent sharp declines are consistent with silver’s historical tendency to magnify gold’s direction during strong phases. While speculative positioning has contributed to near-term moves, fundamentals remain supportive, with ongoing industrial demand, including from data centres and AI-related infrastructure.

“From here, the market is likely to see periods of consolidation rather than a one-way move,” Wong added. “For investors, the focus should be less on timing the exact bottom and more on how precious metals fit within a diversified portfolio, particularly while uncertainty remains elevated.”