Precious Metals Hold Steady, JPMorgan Says Buy Gold

Wall St. Cheat Sheet

On Tuesday, gold (NYSEARCA:GLD) futures for December — the most active contract — increased $6.90 to close at $1,372.60 per ounce, while silver (NYSEARCA:SLV) futures for September edged 10 cents lower to finish at $23.07.

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Both precious metals were relatively steady as the U.S. Dollar Index, which compares the greenback in a basket against six other flat currencies, continues to remain stuck in a rage between 80 and 82. However, gold and silver posted their best five-day run of the year last week.

In a recent note, JPMorgan Chase explained that there are some positive seasonality factors coming into play with gold, and that physical gold demand still remains strong.

During the second quarter, demand for gold bars and coins reached a record high of 507.6 tons, up from 285.9 tons a year earlier and well above the five-year average of almost 300 tons, according to the World Gold Council. In the same period, demand for gold jewelry rose 37 percent to 575.5 tons — new multiyear highs.

JPMorgan Chase said that gold typically does well in August and September, and that the strength often correlates with the Denver gold conference. “We’d encourage short-term investors to consider getting long the gold space with a four to five week time horizon. This year the Denver Gold Forum will be from the 22nd to 25th September.”

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By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) closed 0.3 percent higher, while the iShares Silver Trust (NYSEARCA:SLV) dipped 0.7 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) jumped 2.8 percent and 3.1 percent, respectively. Shares of First Majestic Silver (NYSE:AG) surged nearly 5 percent.

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Disclosure: Long EXK, AG, HL, PHYS

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