The correct answer is option 4, Varanasi. During the Gupta reign, Varanasi was known as the best producer of silk cloth. Let`s analyze the other options to understand why they are not the correct answer.

Option 1, Pataliputra, was the capital of the Gupta Empire, but it was not particularly known for silk production. Pataliputra was a major political and administrative center, but not a prominent silk-producing city.

Option 2, Murshidabad, was the capital of Bengal during the Mughal period and was famous for its textile industry. However, Murshidabad was not a part of the Gupta Empire, so it cannot be the correct answer.

Option 3, Ghazipur, is located in present-day Uttar Pradesh. While Uttar Pradesh was known for silk production during various periods, there is no historical evidence to suggest that Ghazipur was a significant silk-producing city during the Gupta reign.

Based on this analysis, the correct answer is Varanasi (option 4) as it was the best producer of silk cloth under the Gupta reign.