Gold could reach $5,600 and silver $120 in bull case, says report

Gold could rise to $5,000-$5,600 per ounce and silver to $95-$120 in a bull-case scenario, according to Monarch PMS. The report sees a 25 per cent probability of the scenario, driven by lower rates, stronger demand and physical tightness

New Delhi: Gold could reach $5,000-$5,600 per ounce and silver $95-$120 per ounce in the bull case, which is assigned a 25 per cent probability, a new report has said.

The bull case scenario assumes weakness in the labour market, forcing the Fed to ease repo rates and real yields roll over, the report from Monarch PMS said.

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Further institutional reallocation into precious metals must resume and physical tightness in silver should return for the bull case to materialise.

Gold is likely to trade in the range of $4,300-$4,700per ounce and silver at $70-$85 per ounce by end-2026 in a base case, with a 55 per cent probability.

The scenario assumes the US Federal Reserve holds rates through September, energy prices normalise, real yields plateau and central banks maintain purchases of around 250 tonnes a quarter.

The bear case, with a 20 per cent probability, sees gold at $3,400-$3,900per ounce and silver at $45-$55 per ounce if the Fed delivers a rate hike in September, oil falls further, and disinflation turns into demand weakness.

“The principal headwind is the 10-year TIPS real yield, which stands at 2.41 per cent and remains a genuine competing return to a zero-coupon asset such as gold,” the report said.

“Silver’s supply-demand fundamentals also remain supportive, with a sixth consecutive annual deficit, 762 million ounces drawn from above-ground stocks since 2021 and mine supply broadly flat for a decade,” the report said.

The firm forecasted physical tightness to amplify upside moves if demand strengthens with paper claims on COMEX roughly 5.6 times registered physical inventory.

“The gold-silver ratio has also normalised, rising from 46x at January’s peak to around 69-fold today, close to its 21st-century average,” the report said, adding that silver has given back much of its earlier outperformance and now looks relatively cheaper than gold.