Speaking at an event at the Scottish Tory conference in Glasgow, the Levelling Up Secretary said the party would likely pitch itself as "Scotland’s party" ahead of the next election, but he told journalists such a move did not scare him.
"The SNP will change its approach for the moment," he said.
"They have a base that of course they need to keep riled up and believing that independence was just over the horizon."
But he said the SNP knows support for another vote is not there.
"They know that they’ve over-reached and therefore, I suspect, what they will do is they will rebrand themselves as Scotland’s party, fighting for more resources at Westminster and fighting to ensure that they deliver domestically in tune with Scottish values more broadly."
Asked after the event if the security of the union being less significant could hurt his party, which pitches itself as the key defender of the UK, at the ballot box, Mr Gove said: “No, I’m not frightened.
"I think it’s a recognition of reality, that the case for independence has been compromised by the failures of the Scottish Government and I think that the majority of people in Scotland want their politicians to concentrate on public service delivery and improving the economy.
"I think that is a good thing, the more we’re talking about how we make people’s lives better on a day-to-day basis and the less we’re rambling about the constitution, the better overall."
His comments come after a BBC report, quoting party sources, said the SNP was focusing on increasing support for independence before pushing for another vote.
Mr Gove also praised one of the SNP’s leading internal critics, MSP Fergus Ewing, and former leadership candidate Kate Forbes.
He said he had a "soft spot" for Mr Ewing, who has been vocal in his opposition of a number of recent Scottish Government policies and particularly critical of the alliance with the Scottish Greens.
He praised Ms Forbes for the way she was able to work with the UK Government during her time as finance secretary.
He was less kind about the rest of the SNP, as he waded into the turmoil engulfing the party over its finances.
The SNP’s auditors resigned in October, with the job still vacant six months later, but Mr Gove offered his own assessment of the party, joking: "The SNP are having trouble finding auditors to sign off their accounts, so I thought I’d save them the trouble.
"They’ve run out of ideas, they’ve got no credibility left – a bankrupt party running a broken government. And that audit comes for free."
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