Is the Bear Market in Precious Metals Beginning? A Technical Divergence Alert

The precious metals market has been on a euphoric ride in October 2025, with gold surging past $4,000 per ounce and silver breaking above $50 per troy ounce. This rally, fueled by geopolitical tensions, a weakening U.S. dollar, and expectations of Federal Reserve rate cuts, has created a frenzy among investors seeking safe-haven assets, according to FXEmpire's analysis. However, beneath the surface of these record highs lies a growing technical divergence in key indicators like RSI and MACD, raising questions about whether the bullish momentum is sustainable-or if a bear market is quietly forming.

Technical Indicators: A Tale of Two Metals

Gold's technical picture is a study in extremes. As of October 10, 2025, its RSI stands at 83.55, firmly in overbought territory, while the MACD line remains above the signal line with a bullish histogram, according to the CentralCharts daily analysis. Moving averages (MA7, MA20, MA50) are all in a steep upward alignment, reinforcing the idea that the trend is far from exhausted. Yet, overbought conditions alone are not a death knell for bullish trends. Historically, gold has shown resilience in the 70–80 RSI range, with central bank demand and macroeconomic tailwinds often overriding short-term corrections, according to a Discovery Alert analysis.

Silver, on the other hand, has exhibited a more volatile profile. Its RSI recently crossed above 70, signaling overbought conditions, while the MACD confirmed a bullish crossover above the signal line, per InvestTech technicals. However, silver's price action has diverged from its momentum indicators. For instance, while the price has broken through key resistance levels ($35, $37), the MACD has failed to generate higher highs in tandem, hinting at weakening upward momentum, according to a MACD + RSI strategy guide. This divergence, though subtle, could foreshadow a correction if not confirmed by stronger volume or price action.

Divergence: The Early Warning System

Technical divergence is the canary in the coal mine for trend exhaustion. In gold's case, a recent breakdown below key moving averages and a test of support at $3,297 has created a mixed picture. While the RSI briefly dipped into oversold territory during this pullback, the MACD showed no corresponding bearish divergence, suggesting the decline was more of a consolidation than a reversal, according to the CentralCharts analysis. For now, gold remains above critical support levels, with bullish candlestick patterns like the "Bullish Engulfing" reinforcing the idea that the trend is intact (see the CentralCharts analysis).

Silver's divergence story is more concerning. A classic bearish divergence emerged when the price formed higher highs but the RSI failed to follow suit, indicating that buyers are losing conviction, as explained in the MACD + RSI strategy guide. This is compounded by the fact that silver's MACD histogram has begun to flatten, a sign that the bullish momentum is waning. While the metal remains above its 50-day moving average, traders are advised to monitor the $41–$45 range for potential resistance, where a failure to break could trigger a deeper correction, per InvestTech technicals.

The Overbought Paradox

The paradox of overbought conditions in gold and silver is that they can coexist with strong trends. For example, gold's RSI has spent weeks above 70 without triggering a meaningful sell-off, a phenomenon attributed to its role as a geopolitical hedge and central bank purchases, according to the Discovery Alert analysis. However, this does not eliminate the risk of a short-term correction. Analysts warn that overbought RSI and MACD levels could lead to a pullback of 5–10%, particularly if the Fed signals a more hawkish stance or the dollar rebounds (the Discovery Alert analysis cautions similarly).

Silver's overbought RSI is more precarious. Unlike gold, silver's demand is more tied to industrial and speculative flows, making it more susceptible to sudden shifts in sentiment. A breakdown below the $35 level would not only invalidate the recent bullish case but also expose key support at $28–$30, where a prolonged bearish phase could begin, per InvestTech technicals.

Conclusion: Caution Amidst the Hype

The current technical landscape for gold and silver is a mix of bullish momentum and early bearish signals. While gold's structural strength and macroeconomic tailwinds suggest the trend is far from over, silver's divergences and overbought conditions warrant closer scrutiny. Investors should treat overbought indicators as caution flags rather than sell signals, using them to tighten stop-losses or hedge positions rather than abandon the trend entirely.

For now, the bear market in precious metals remains a distant threat. But as the old adage goes, "Bull markets climb a wall of worry, but bear markets often fall a wall of fear." The key will be watching how divergence evolves-and whether the fundamentals can outpace the growing technical skepticism.