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Silver fell below the $50 mark on Friday, despite having touched $120 per troy ounce earlier this year following a spectacular rally in precious metals. Gold has already fallen below $4,000. Why is this happening now?
The decline in gold and silver prices is striking after the sharp gains seen earlier this year. This is particularly notable given that concerns about government debt are mounting, geopolitical tensions remain elevated and the Fed also left interest rates unchanged. All of these factors would normally support gold and, by extension, silver. Precious metals are an important safe haven for both institutional and retail investors.
“The most striking difference compared with a year ago is the change in sentiment,” says Koen Lauwers, financial analyst. The sense of euphoria at gold conferences at the time, when gold had just broken above the $4,000 mark, stands in sharp contrast to sentiment today.
“For silver, $50 is a crucial level from both a technical and psychological perspective,” he continues. Technically, because silver peaked around this level in 1980 and 2011, making $50 an important support level on the price chart. Psychologically, because round numbers act as anchor points in financial markets. Many investors place buy and sell orders around these levels. When the price breaks through such a level, as silver has done with $50, it can trigger automatic buying or selling. This can sometimes accelerate a decline, or conversely mark the point at which investors have been waiting to re-enter the market.
“There are several factors at play,” says Paul Buitink. “Partly, gold is a victim of its own success. Gold is a highly liquid safe-haven asset that can be sold quickly during periods of market stress. Falling prices can point to a liquidity problem in the market.”
Precisely because gold can be sold quickly and easily, it can serve as a source of liquidity in difficult market conditions. With technology shares now being sold off following a 13% drop in Alphabet shares, the parent company of Google, investors may be selling precious metals to absorb losses elsewhere. The same dynamic may be playing out in other countries in response to high oil prices or the falling stock market in China. In addition, the Russian central bank has been selling gold for months to help finance the country’s budget deficit.
“At the same time, we are also seeing many customers waiting for this dip before moving back into precious metals, particularly those who sold at the peak in January,” Buitink continues. The same trend can be seen internationally: Chinese households are once again buying gold in large quantities, according to Bloomberg, following the price decline. Purchases through bank gold savings plans have already exceeded the total recorded for all of 2025.
Both gold and silver are being affected by the Fed’s new policy direction. The Federal Reserve, commonly known as the Fed, is the US central bank. After cutting rates in late 2025, the Fed began raising interest rates again in September, for the first time in three years. This is a headwind for precious metals, particularly in the short term. When interest rates rise, other safe-haven assets such as government bonds become more attractive to investors. “Although the Fed left rates unchanged on Wednesday, markets are pricing in a further rate hike in December,” Buitink explains.
There is, however, an important caveat. “Higher bond yields also increase the interest costs governments have to pay on their debt, and that is particularly relevant now for countries such as the United States and France,” Buitink continues. “This is one of the reasons why many analysts expect the gold price to rise again over the longer term.”
