MCX October gold futures were at ₹1.53 lakh per 10 grams, up 0.14%, while December silver futures stood at ₹2.38 lakh per kg, down 0.08%.
Internationally, gold was trading around $4,434 an ounce, while silver was near $66.95 an ounce, according to the market update
While both metals are responding to similar macroeconomic cues, their recent price action and relative valuations paint a different picture.
Why gold remains expensive
According to an analysis by Monarch PMS, 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 ounc in early August, gold was already about 8% above this midpoint.
The firm said gold’s January peak of $5,589 an ounce represented a significant overshoot of its modelled range. 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
The picture is different for silver. Monarch PMS uses the gold-silver ratio to assess silver’s relative valuation. Using a normalised ratio of 60:1, it estimates a silver range of $54-$77 an ounce, with a midpoint of $65.
At around $61.7 an ounce, silver was about 6% below this midpoint, according to the analysis. This makes silver relatively cheaper than gold on the firm’s valuation framework.
The gold-silver ratio also supports this view. It had 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.
What is supporting silver now
Silver has a different demand profile from gold because it is used both as an investment asset and in industrial applications. A softer dollar can support both metals by making dollar-denominated commodities relatively cheaper for holders of other currencies.
Analyst Gaurav Garg, Head of Research at Lemonn, said silver’s outlook remains constructive because of investment as well as industrial demand. He also pointed to the rupee’s weakness as an additional factor supporting domestic MCX silver prices.
For MCX silver, Garg identified ₹2.36 lakh per kg as support and ₹2.42 lakh per kg as resistance. A sustained move above the resistance level could strengthen buying momentum, he said.
US inflation data in focus
The immediate market focus is now on upcoming US inflation data, particularly the producer price index (PPI) and consumer price index (CPI). These readings could influence expectations about the Federal Reserve’s rate path.
Nirpendra Yadav, Senior Research Analyst at Bonanza, said gold remains range-bound, with $4,300-$4,500 an ounce emerging as an important technical range. For silver, he identified $65 and $67 an ounce as key levels.
For Indian investors, the combination of global metal prices and the rupee’s movement remains important. A weaker rupee can amplify gains in domestic gold and silver prices when international prices rise, although it can also cushion declines when global prices fall.
