RBC's analysis suggested margins were currently around 15% better than when the market last peaked in 2011-2012, but that valuations were 44% lower than at that point on an enterprise value/EBITDA basis.

"Tailwinds from lower oil prices and continued weak operating currencies seem here to stay due to the ongoing COVID-19 pandemic," said RBC analyst James Bell.

"On top of this with the dividend yield in the wider market falling we think gold equities smaller payouts could become more attractive on a relative basis."

RBC also upped its gold price forecast for the year by 9% to US$1663/oz, and by 12% for 2021 to $1630/oz.

It noted those were averages and there were upside scenarios to over $2000/oz.

Despite the positive outlook, Bell cautioned the sector "would not be immune" from the impact of COVID-19.

"Restrictions on movement of skilled labour, lower efficiencies due to new operating procedures and risks around supply chains will be key to watch," said Bell.

Despite its buoyant stance on gold, RBC was less positive on the prospects for silver.

"We see little reason for the metal to outperform gold in the near term given global industrial production and related demand from industrial applications are likely to remain lacklustre until later in 2020. These headwinds will in our view more than offset any increased investor interest due to the relative valuation versus gold," said Bell.

RBC reduced its forecast price for silver by 12% for 2020 to US$15.35/oz.