Gold & Silver: Short-term dip or long-term opportunity?

Gold and silver prices are taking a hit, with gold slipping below $3,030 after touching record highs and silver crashing under $34. Even with all the global chaos, these metals are pulling back-leaving investors scratching their heads. 

Is this just a little breather, or are we looking at a bigger shake-up?

The fed factor: A market puzzle

The Federal Reserve just hit the pause button on interest rates again, keeping them at 4.25%-4.50%.

Not only that, but they’re also slowing down their quantitative tightening-normally a recipe for higher gold prices. And yet, gold isn’t budging. Instead, the U.S. dollar is flexing its muscles, pushing metals lower.

Adding to the mystery, Fed Chair Jerome Powell admitted that economic uncertainty is on the rise. Meanwhile, the Fed’s new projections are all over the place-fewer rate cuts in 2025, but higher inflation and unemployment. It’s a classic case of mixed signals, leaving investors unsure whether to double down on gold or wait for more clarity.

Geopolitical tensions vs. market reaction

Gold is supposed to be the go-to safe haven in times of crisis, right? But despite rising tensions in the Middle East, like Israel resuming airstrikes in Gaza, gold is actually dipping. That’s a head-scratcher. It seems traders are cashing in profits rather than rushing to safety.

Alex Ebkarian from Allegiance Gold puts it simply: “Gold isn’t acting as a safe haven yet because we’re not officially in a recession.” The key word? Yet. If the economy takes a turn for the worse, we could see a real gold rush down the line.

‍

Silver’s rollercoaster ride & Trump’s tariff factor

Silver is getting hit even harder, plunging below $34 as the U.S. dollar climbs toward 104. This isn’t just random market noise-it’s directly tied to the Fed’s stance and Trump’s economic policies.

Powell threw another curveball, saying Trump’s proposed tariffs could slow growth while driving inflation higher. Tariffs usually create uncertainty, which tends to be good for metals like silver. But with interest rates still elevated, the immediate reaction has been a sell-off.

Even with today’s drop, silver is still up 28% year-to-date, outperforming most major assets. Citi analysts are staying bullish, calling for gold to hit $3,500 by year-end due to stagflation fears. If they’re right, today’s dip could be a golden (or silver) buying opportunity.

Why the long-term outlook for Gold & Silver is still bright

Short-term fluctuations aside, the bigger picture for gold and silver remains strong. Western investors are still underexposed to gold, with ETF holdings at 86 million ounces-far below the 110 million ounces held during the COVID era. This suggests plenty of room for upside if investor sentiment shifts.

Silver, meanwhile, has a booming future in industrial applications. Consider this: by 2050, solar energy alone could consume 85–98% of the world’s current silver reserves. The automotive industry is another major growth driver, with electric vehicle (EV) production ramping up and demand increasing for silver-heavy components like charging infrastructure and advanced powertrains.

Technical insights: Buy-the-dip moment or a red flag?

At the time of writing, gold is showing some bearish signals as RSI towers into overbought territory. However, prices are still elevated above the moving average, an indicator that the larger trend is still upward.

Key levels to watch are $3,050 on the upside, and on the downside $2,984, and  $2,921.

Silver is also showing clear bearish bias with a significant dip down from highs of $34.00. However, prices almost touching the lower bollinger band hints at oversold conditions- a potential reversal. The reversal narrative is also helped by prices remaining above the moving average- a sign that the overall trend is still upward. 

Key levels to watch on the upside are $33.86 and $34.25. On the downside, the key levels to watch are $32.59 and $32.00.

You can get involved and speculate on the price of these two incredible assets with a Deriv MT5 account or a Deriv X account.