Gold Trades Near Record Highs as Silver Looks Relatively Cheap

On September 8, gold and silver futures traded mixed on the Multi Commodity Exchange (MCX), as precious metals remained supported by a softer US dollar and expectations around US monetary policy.

According to Monarch PMS analysis, gold's modelled fair-value range is $3,248-$4,595 an ounce, with a midpoint of $3,922 an ounce. At around $4,242 an ounce in early August, gold was already about 8% above this midpoint.

Gold subsequently fell to around $3,985 an ounce in June, close to its estimated fair value, before recovering. This suggests that while the earlier speculative excess has eased, gold is still trading above its modelled midpoint, rather than at a clearly cheap level.

Silver looks relatively cheaper compared to gold on Monarch PMS' valuation framework. The firm uses the gold-silver ratio to assess silver's relative valuation and estimates a range of $54-$77 an ounce, with a midpoint of $65. At around $61.7 an ounce, silver was about 6% below this midpoint.

The gold-silver ratio also supports this view, having fallen to around 46 in January, indicating that silver had become expensive relative to gold. It has since moved back to around 69, close to its 21st-century average of 69:1.