Gold and silver’s record rally hits a sudden reversal

Commodity investors have been riding a profit wave in 2025, with gold and silver leading the way to profit for protection-minded portfolio players.

The first is gold, which has increased in value by about 56% over the past year and 60% year to date, as measured by the benchmark SPDR Gold Shares ETF (GLD).

Silver has soared even higher, rising 62.6% over the past year and 78.4% year to date, as measured by the benchmark iShares Silver Trust Index (SLV).

However, over the past week, both precious metals have taken a downward turn, with gold losing 2% and silver 5%. This trend persisted: as of Tuesday afternoon, GLD was down 6% on the day while SLV was down 7.9% as investors shifted their precious metals allocations.

“The rally in gold and silver appears to have run out of steam at the start of the week,” said Daniela Sabin Hathorn, senior market analyst at Capital.com. “The trade had become quite overcrowded and was a bit hot given the levels both markets were at, so a reversal is not entirely unexpected.”

Here’s Why Gold and Silver Prices Reversed Trend

Hathorn said commodity investors shouldn’t press a panic button on gold and silver’s near-term woes. At least not yet.

“Both gold and silver were poised for a pullback, so there is likely to be some profit-taking, which deepened the reaction,” Hathorn noted. “The fundamentals have not changed, with long-term support still in place. However, the strength of the rally over the past month was somewhat unwarranted, raising the possibility of a deeper pullback following this news of positive business developments.”

That’s not the only reason gold and silver prices have reversed course over the past week, according to commodity markets, with these three factors particularly pushing prices lower.

A Shanghai surprise is at stake

One reason gold and silver prices are reversing is because margin requirements on the Shanghai Stock Exchange were raised last week, triggering a selloff that spread from Asia to the rest of the world.

“The magnitude of the retracements we are seeing is an indicator that some of the current rally has been driven by speculation,” said Brett Elliott, director of marketing at the American Precious Metals Exchange (APMEX).

The metals market is tense

Another root cause of silver’s rally is the physical supply crunch, which has yet to be eased and could shake investor confidence.

“A massive sell-off while weaker hands and speculators are rattled wouldn’t be surprising, but I’m not sure it would stop a rally driven by physical shortages,” Elliott noted. “It certainly didn’t stop platinum.”

Geopolitical angst between the United States and China weighs on major metals markets

One of the reasons gold prices rose in the first place was concerns over US-China relations.

“This is particularly true of speculation that China may abandon U.S. Treasuries and turn to gold as its primary safe haven,” said Wyatt McDonald, president of Coinfully, a service marketplace for coin collectors. “This has led to an expected drop in interest rates as well as a potential decline in the dollar.”

Metals and other markets move primarily based on what investors think will happen, not what has happened, McDonald said.

“When new information emerges that challenges these expectations, prices adjust,” he added. “Gold has become a popular trade recently, and that’s evident in the price rise we’ve seen so far. In this kind of environment, it doesn’t take much to spook investors into taking some profits. That’s most likely what we’re seeing right now.”

Assess your own risk of market volatility

If the current rise in volatility in the gold and silver markets is overly concerning, it is time to take a hard look at your precious metals exposure.

“Given the surge and uncertainty currently in the global economy, metals are likely to be volatile like today,” McDonald said. “If you’re not comfortable with this volatility, then perhaps reconsider a large allocation. If you don’t mind the volatility and firmly believe it will continue to increase over time, then that’s a different story.”