By: Kim Peterson
Some experts say it’s the right time to buy gold again. The precious metal hit a four-year low of $1,180 an ounce in late June and has been picking up steam ever since, trading at around $1,373 an ounce on Friday.
Some of the new enthusiasm on Friday came after a note to clients from analysts at JPMorgan (JPM 0.00%). The bullishness about gold was echoed in other areas of Wall Street as well. Bloomberg reports that 13 analysts think gold prices will rise next week, while four thought prices would drop and five were neutral.
Here are four reasons why JPMorgan and others say gold is now good.
1. Gold’s fall is probably over. Gold fell 25% and gold equities fell 50% over the last 10 months, but stocks rose about 13%. “Gold has bottomed, of that there can be little doubt,” asset manager Adrian Day told Kitco News.
2. Gold demand is strong. Consumer demand hit its highest level ever in the second quarter, CNNMoney reports. New interest was coming from consumers in the Middle East and Turkey in addition to the traditional large markets of China and India.
3. Gold could see a supply squeeze. South African mine workers have been threatening strikes against gold producers for months. The National Union of Mineworkers this week rejected the industry’s offer of a 5.5% wage increase, AFP reports. If labor strikes take place, the resulting decline in supply could drive prices up.
4. Gold prices generally rise in August and September. That’s partly because there are seasonal festivals during this time in India, which is the largest single gold market.