Gold and silver could be poised for the next leg of their rally, with gold potentially reaching $4,300-$4,700 an ounce and silver $70-$85 by the end of 2026 in Monarch PMS’s base-case scenario.
The wealth management firm assigned a 55% probability to the base case, which assumes the US Federal Reserve holds rates through September, energy prices normalise, real yields plateau and central banks continue buying around 250 tonnes of gold a quarter.
The outlook comes as precious metals remain supported by a combination of central-bank demand, constrained silver supply and expectations around the future path of US monetary policy.
Bull case: Gold at $5,600, silver at $120
For investors willing to take a more bullish view, Monarch sees significant upside.
Its bull case, carrying a 25% probability, puts gold at $5,000-$5,600 an ounce and silver at $95-$120 an ounce by year-end.
This scenario would require weakness in the labour market to push the Federal Reserve towards easing, triggering a rollover in real yields. Monarch also expects institutional reallocation towards precious metals and renewed physical tightness in silver to amplify the upside.
The firm’s most bullish projections imply a potential move well beyond its base-case range, particularly for silver.
Bear case: Gold could fall to $3,400-$3,900
The downside scenario has not disappeared.
Monarch assigned a 20% probability to its bear case, in which gold falls to $3,400-$3,900 an ounce and silver to $45-$55 an ounce.
The scenario assumes the Fed delivers a rate hike in September, oil prices decline further and disinflation evolves into weaker demand.
For precious-metal investors, the biggest headwind in this scenario is real yields.
Real yields remain the key risk for gold
Monarch identified the 10-year US Treasury Inflation-Protected Securities (TIPS) real yield, currently at 2.41%, as the principal headwind for gold.
Higher real yields can make interest-bearing assets more attractive relative to gold, which does not generate income. As a result, the direction of real yields remains an important variable for investors assessing whether the precious-metals rally can extend.
A sustained rollover in real yields, on the other hand, could strengthen the case for gold and other precious metals.
Silver may offer relatively better value
While gold remained the headline precious-metal trade, Monarch’s valuation framework suggests that silver may currently offer greater relative value.
The firm’s model puts gold’s fair-value range at $3,248-$4,595 an ounce, with a midpoint of $3,922. For silver, the corresponding range is $54-$77 an ounce, with a midpoint of $65.
Gold’s June low of $3,985 was within roughly 2% of its modelled midpoint. Silver, at $61.70, remained below its midpoint, suggesting that silver looks relatively cheaper on Monarch’s valuation framework.
The gold-silver ratio reinforces that argument.
The ratio has risen from around 46x at January’s peak to about 69x currently, close to its 21st-century average. Monarch uses 60x as the benchmark in its model.
The move means silver has surrendered much of the outperformance it enjoyed earlier in the year, potentially improving its relative appeal compared with gold.
Silver’s supply crunch could amplify the next move
Beyond valuation, Monarch sees a strong fundamental case for silver.
The market is expected to record a sixth consecutive annual deficit, while around 762 million ounces have been drawn from above-ground stocks since 2021.
At the same time, mine supply has remained broadly flat for roughly a decade.
The imbalance becomes particularly important because of the structure of the paper market. Monarch estimates that paper claims on the COMEX are approximately 5.6 times registered physical inventory.
If investment or industrial demand strengthens while physical availability remains tight, the firm expects this imbalance could amplify upward moves in silver.
What investors should watch
The next leg of the precious-metals rally will therefore depend on several key variables: the Federal Reserve’s rate path, US real yields, central-bank gold purchases, energy prices and the strength of physical demand for silver.
For gold, real yields and monetary policy remain the critical swing factors. For silver, the combination of a persistent supply deficit, depleted above-ground inventories and potential physical tightness could make the metal more sensitive to a fresh wave of demand.
