Gold producers that lost almost half of their market value are tempting back investors — from Julius Baer Group to Invesco — who are getting set for a rebound as Chinese demand for the yellow metal soars.

“We expect a major turn in gold equities in the next two years,” said Herisau, Switzerland-based Erich Meier, who manages about $500m in the Julius Baer Multipartner Gold Equity Fund and other funds.

“Lower production costs and much less capital expenditure spending bode very well for the industry in the near future,” Mr Meier said.

The Julius Baer fund holds Newcrest Mining, Barrick Gold Corporation and Kinross Gold Corporation, according to Bloomberg data. It’s raising holdings in Lake Shore Gold Corporation, Mr Meier said in an e-mailed response to questions.

Producers including Barrick, the world’s biggest, say they are poised to benefit from rising prices after cutting staff, selling marginal assets and lowering production costs.

Gold, which posted the biggest annual slump in three decades last year after hitting a low of $1,180/oz, may rise to $1,500/oz next year, aided by demand from China, according to Australia & New Zealand Banking Group.

“I’ve been selectively adding to core names in the fourth quarter of 2013 and early in 2014.”

Toronto-based Norman MacDonald, who manages about $1.5bn in funds including Invesco’s Gold and Precious Metals Fund, said in an e-mailed response to questions.

“I currently see more upside in the equities in the short and medium term,” he said. The fund has raised its holdings in Torex Gold Resources Incorporated, according to Mr MacDonald.

Chinese consumers bought a record 1,065.8 tonnes of gold last year, 32% more than a year earlier, as the country overtook India as the biggest user, the World Gold Council said on February 18.

UBS last month boosted forecasts for gold this year, citing a change in US investors’ attitudes toward the precious metal that’s rallied this year on increased haven demand and buying from Asian consumers.

“The path of least resistance for the gold price is up at the moment,” said David Baker, Sydney-based managing partner at Baker Steel Capital Managers, who manages about $500m and holds gold producers including AngloGold Ashanti. The metal traded at $1,326.50/oz at 9.30am in Sydney on Monday. The S&P/TSX Global Gold Sector Index jumped 27% this year.

Eight major gold producers that reported net losses of $23bn in the 12 months to December 30 may have full-year net income of $3bn this year and $4.1bn in 2015, according to analysts’ estimates compiled by Bloomberg.

Still, gold’s volatility last year showed investors should exercise caution, Ed Bowie, who manages about £35m at Altus Resource Capital, said in a January 30 interview.