Temporary profit-taking or a reversal? Gold and silver futures turn lower as spot silver retreats after historically surpassing $50.

```

Gold and silver, which have repeatedly hit record highs recently, experienced a dramatic intraday reversal this Thursday.

Overseas gold and silver futures both turned lower after hitting historic intraday highs and decades-highs. Spot silver surged and then pulled back, first breaking above the $50 mark for the first time in history, then giving back most of its gains. Gold futures and spot gold both flipped between gains and losses during the session, reflecting the market's continued optimism about the long-term bull outlook for precious metals.

On Thursday, as U.S. stocks set intraday record highs for the fourth consecutive day before the opening bell, COMEX December gold futures neared $4,078, up nearly 0.2% on the day. Spot gold approached $4,058, up nearly 0.4% intraday. Both turned lower in early U.S. trading. At midday, as new daily lows were hit, gold futures fell below $3,958, down nearly 2.8% intraday, and spot gold was below $3,945.1, down 2.4%.

COMEX December silver futures briefly rose to $49.965 before the open, nearing the all-time intraday high of $50.35 set in 1980, but then turned lower, hitting a new intraday low of $46.89 at midday, down 4.3% for the day. Spot silver had risen above $51 in early U.S. trading, setting a new high since the 1980 Hunt Brothers short squeeze event, up 4.8% on the day, but by U.S. midday had nearly erased all gains.

Commentary suggests that the retreat in gold and silver prices indicates investors chose to take profits after a technical overbought surge in recent days. Some analysts partially attribute this to a preliminary ceasefire agreement in Gaza, easing geopolitical risks. Peter Cardillo, chief market economist at Spartan Capital Securities, said Thursday's pullback is a necessary correction that may be short-lived and suggests investors consider buying on further dips.

The Market Ear commented that warning signals are flashing in the options market, with skyrocketing volatility possibly indicating an impending correction.

Technical indicators show gold and silver are severely overbought

Technical analysis shows both gold and silver are in extremely overbought status.

According to The Market Ear, the Cboe Gold Volatility Index (GVZ) has risen to a recent high, and historical data shows that gold tends to pause or correct after sharp increases in volatility.

The Cboe Silver ETF Volatility Index (VXSLV) has seen an explosive surge, and every spike in volatility over the past year has been followed by silver pausing or correcting.

The Market Ear notes that the monthly RSI for gold is at “the most overbought levels since most current speculators were born.”

The monthly RSI for silver has reached its highest level since the panic surge in 2011.

Saxo Bank analysts note that strong ETF inflows, momentum trading, and panic buying have driven prices into technically overbought territory, triggering short-term caution. Nonetheless, increasing political uncertainty, expectations of further rate cuts in the U.S., and continued central bank buying remain strong support for precious metals.

The strengthening U.S. dollar also poses a potential threat to gold prices. The Market Ear observed that although gold has historically preferred a weak dollar, the dollar has recently performed strongly, creating a “divergence gap” with the gold price. Historically, periods of dollar strength have often been accompanied by pauses or corrections in gold prices.

Tight silver supply drives price surge

Commentary this Thursday notes that silver has risen more than 67% so far this year, marking the largest year-to-date gain since 1979 and far outpacing gold's roughly 54% rise this year. Dow Jones Market Data shows this is the largest outperformance gap between silver and gold in 15 years.

Tight supply in the London spot market is seen as a key driver in this round of silver price surges. The imbalance is due to worries the U.S. government might impose tariffs on silver, prompting traders to ship silver to New York and causing London inventories to fall, reducing available silver for lending.

This Thursday, the 1-month annualized lease rate for silver—which reflects silver lending costs in London—and the SOFR 1-month value both rose to 11.1%, the highest since records began in 2002.

TD Securities commodity strategist Daniel Ghali said Thursday the market is currently at the top of what the firm previously called a "buyable silver squeeze". He believes higher spot prices in London will attract more liquidity, with traders purchasing cheaper metal in the U.S. and China to ship to the UK and capture the price spread.

Dual boost from industrial and safe-haven demand

The rise in silver prices has also benefited from strong industrial demand and the "currency depreciation trade." This metal is widely used in solar panels, wind turbines, and other new energy equipment, with industrial applications accounting for over half of silver sales. Demand is expected to outpace supply for the fifth consecutive year in 2025.

Peel Hunt commodities analyst Kieron Hodgson says the currency depreciation theme "has galvanized investor enthusiasm for gold and silver, allowing them to look at these assets the same way they would at AI or tech stocks."

Sprott Asset Management market strategist Paul Wong wrote in a report: "We believe that for silver prices to continue rising, demand in lower value-added end-use categories such as photography and silverware needs to be significantly disrupted. Meanwhile, demand in higher value-added categories needs to keep growing, such as electric and electronics demand driven by AI-related spending, photovoltaics, and other technology-related uses."

Dollar depreciation boosts silver more than gold; gold price rise also drives silver

If the dollar depreciates further, silver prices could rise further as this will encourage more international buying.

Silver is globally priced and traded in dollars. The silver market is much smaller than the $25 trillion gold market, meaning that dollar volatility impacts silver prices by a greater percentage compared to gold. Rising inflation could also support demand for tangible assets such as silver.

A recent HSBC report forecasts silver prices will peak at $53/oz this year and up to $55 next year, but expects a correction in the second half of next year. The bank’s chief precious metals analyst James Steel believes some of silver's gains will come from gold, as gold typically exerts "a powerful pull" on silver, possibly because “investors who haven’t fully capitalized on gold’s rally” begin buying.

Wong said that if silver prices can hold above $50, "this may indicate that silver's economic value and store of value features are being re-evaluated, or that silver is being re-priced in the market."

Risk Warning and DisclaimerThe market carries risk, and investments require caution. This article does not constitute personal investment advice and does not take into account the individual objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their specific circumstances. Investing based on this is at your own risk. ```