Soft elastic composite materials containing particulate rigid inclusions in a soft elastic matrix are candidates for developing soft actuators or tunable damping devices. The possibility to reversibly drive the rigid inclusions within such a composite together to a close-to-touching state by an external stimulus would offer important benefits. Then, a significant tuning of the mechanical properties could be achieved due to the resulting mechanical hardening. For a long time, it has been argued whether a virtual touching of the embedded magnetic particles with subsequent detachment can actually be observed in real materials, and if so, whether the process is reversible. Here, we present experimental results that demonstrate this phenomenon in reality. Our system consists of two paramagnetic nickel particles embedded at finite initial distance in a soft elastic polymeric gel matrix. Magnetization in an external magnetic field tunes the magnetic attraction between the particles and drives the process. We quantify our experimental results by different theoretical tools, i.e., explicit analytical calculations in the framework of linear elasticity theory, a projection onto simplified dipole-spring models, as well as detailed finite-element simulations. From these different approaches, we conclude that in our case the cycle of virtual touching and detachment shows hysteretic behavior due to the mutual magnetization between the paramagnetic particles. Our results are important for the design and construction of reversibly tunable mechanical damping devices. Moreover, our projection on dipole-spring models allows the formal connection of our description to various related systems, e.g., magnetosome filaments in magnetotactic bacteria.