The asset management firm Monarch PMS has presented its forecasts for gold and silver, suggesting that these precious metals may resume their rally. In the base case, gold is expected to reach the range of $4300–$4700 per ounce, and silver $70–$85 by the end of 2026.
The base case has a 55% probability and is based on the assumption that the US Federal Reserve will maintain current interest rates until September, energy prices will stabilize, real yields will plateau, and central banks will continue to purchase about 250 tons of gold quarterly.
The prospects for precious metal growth are supported by the combined demand from central banks, limited silver supply, and expectations regarding the future trajectory of US monetary policy.
Optimistic Scenario: Gold $5600, Silver $120
For investors willing to consider a more optimistic outlook, Monarch sees significant growth potential. Their optimistic scenario, which has a 25% probability, sets the price for gold in the range of $5000–$5600 per ounce, and silver at $95–$120 per ounce by year-end.
This scenario would require a weakening labor market, pushing the Federal Reserve toward easing policy and triggering a rollover of real yields. Furthermore, Monarch anticipates institutional asset reallocation towards precious metals and a resumption of physical silver scarcity, which would strengthen the growth.
The firm's most optimistic forecasts suggest a potential price movement significantly above the base case range, especially for silver.
Pessimistic Scenario: Gold Falls to $3400–$3900
A negative scenario cannot be ruled out. Monarch assigned this scenario a 20% probability, according to which the price of gold will fall to $3400–$3900 per ounce, and silver to $45–$55 per ounce.
This scenario assumes that the Fed will raise rates in September, oil prices will continue to decline, and disinflation will turn into demand weakness. For precious metal investors, the main obstacle in this case is real yields.
Real Yields Remain a Key Risk for Gold
Monarch identified the real yield on US 10-year Treasury Inflation-Protected Securities (TIPS) at 2.41% as the primary risk factor for gold. Higher real yields make income-bearing instruments more attractive compared to gold, which does not generate income. Consequently, the direction of real yields remains an important variable for investors assessing the possibility of a precious metals rally extension.
On the other hand, a sustained rollover of real yields could strengthen the arguments for gold and other precious metals.
Silver May Offer Relatively Better Value
Although gold has remained the main focus among precious metals, Monarch's valuation model suggests that silver may currently offer greater relative value. The firm's model defines the fair value range for gold as $3248–$4595 per ounce, with an average price of $3922. The corresponding range for silver is $54–$77 per ounce, with an average price of $65.
The minimum gold price in June, which was $3985, was approximately within 2% of the calculated average. Silver, priced at $61.70, remained below its average point, indicating that silver appears relatively cheaper within Monarch's valuation system.
Gold-to-Silver Ratio Confirms This Thesis
The ratio between these metals has risen from approximately 46x at the January peak to the current 69x, which is close to the average for the 21st century. Monarch uses 60x as a benchmark in its model. This increase means that silver has lost a significant part of the advantage it previously showed this year, potentially improving its relative attractiveness compared to gold.
Silver Supply Shortage Could Fuel Further Growth
In addition to valuation, Monarch sees strong fundamental reasons for silver. The market is expected to record its sixth consecutive annual deficit, while about 762 million ounces have been extracted from terrestrial reserves since 2021. Meanwhile, ore production has remained generally stable over approximately ten years.
This imbalance becomes particularly important due to the structure of the paper market. Monarch estimates that paper claims on COMEX amount to approximately 5.6 times registered physical reserves. If investment or industrial demand strengthens while physical availability remains tight, the firm expects this imbalance could fuel further growth in silver prices.
What Investors Should Watch
Thus, the next phase of the precious metals rally will depend on several key variables: the trajectory of Federal Reserve rates, US real yields, central bank gold purchases, energy prices, and the strength of physical silver demand. For gold, real yields and monetary policy remain critical factors. For silver, the combination of sustained supply shortage, depletion of terrestrial reserves, and potential physical scarcity could make the metal more sensitive to a new wave of demand.