Gold and silver prices have climbed to record levels, but technical indicators suggest the rally may be stretched. Traders are watching for signs of cooling after months of sharp gains.
Gold and silver have had an exceptional year. Gold is up about 53% in 2025, while silver has gained around 78%. These strong moves have pushed both metals into overbought territory, raising concerns that prices may soon correct.
The key question now is whether this is a short pause or the start of a deeper pullback.
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Technical Red Flags: RSI And Distance From Key Averages
Technical data points show that gold and silver could be overheating. The Relative Strength Index (RSI), a common momentum gauge, stands near 80 for gold and 83 for silver.
Readings above 70 often signal that prices have risen too far, too fast. Both metals are also trading well above their 50-day and 200-day moving averages, suggesting the rally may have run ahead of itself.
In the past, such stretched levels have often led to short-term corrections as traders lock in profits.
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Silver’s Tight Market Adds To The Risk
Silver’s situation looks even more unstable. Reports show backwardation in the futures market, meaning spot prices are higher than futures contracts—often a sign of tight supply.
Physical withdrawals from major silver ETFs and delivery delays in London have deepened the squeeze. These pressures can push prices up quickly but also create sharp drops once conditions ease.
Because silver’s market is smaller and more sensitive to industrial demand, even moderate selling can trigger big price swings.
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What Could Trigger A Pullback – And What Could Prevent It
A stronger US dollar, firmer interest rate expectations, or easing supply pressure could all spark a pullback.
However, continued central bank gold buying and long-term gold price forecasts, such as Bank of America’s $5,000-per-ounce projection for 2026, show that investor confidence remains strong.
If demand holds, any short-term dip may simply reset prices for the next leg higher.
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