After reaching over $US1796 per ounce last Thursday, gold has dropped back this week to around $1765/oz.

RBC analysts said a modest seasonal correction was to be expected, but it presented a good investment opportunity in regards to gold stocks.

“A number of positive catalysts are in place to support the current gold price rally, including central bank buying, fears surrounding the European debt crisis and expectations of further economic stimulus in some European and Asian countries,” the analysts said.

For the remainder of the year and next year, RBC’s gold price estimate is unchanged at roughly $1700/oz, though that’s within a broader range of $1600-1850/oz.

However, RBC raised its long-term price assumption to $1400/oz from $1200/oz.

“This reflects our estimated ‘all-in mine site costs’, including sustaining capital but excluding new mine capital, that are covered at the 90th percentile of the 2012 cost curve and that we would expect to rise by 10-15% in 2013,” RBC said.

Meanwhile, RBC said gold equities rose by 10% on average in September.

“However, more generally, gold equities have underperformed the gold price year-to-date and continue to trade at or near all-time low valuations, offering investors an attractive buying opportunity, in our assessment,” analysts said.

Price targets for gold stocks were raised by 12-42%, while earnings estimates for producers were raised by 2-6% for the current financial year, and by 8-44% in the 2014 financial year, with the largest increases for the highest cost pure producers.

Regis Resources was named as a top pick due to reliable consistent production. The company’s price target was raised by 12% to $6.50.

Evolution Mining was favoured for its implied return of 38%, the highest among the gold stocks covered by RBC.

The price target for Evolution was boosted by 18% to $2.60, though 2013 financial year earnings forecasts were revised down by 17% to $124 million due to lower expected silver production from the company’s new Mt Carlton mine in Queensland.

Low-cost Philippines producer Medusa Mining was also named as a preferred pick with a projected return of 26% and its price target was lifted by 15% to $7.50.

For market giant Newcrest Mining, the price target was raised by 13% to $27 and earnings estimates by 2%, 18%, 57% and 82% over the next four years, respectively, due to higher long-term gold price assumptions.

Kingsgate Consolidated’s price target was raised by a healthy 25% to $5 and the company is expected to benefit most from higher gold prices next year, with forecast earnings tipped to rise by 6% to $83 million.

Among the explorers and developers, west Africa-focused PMI Gold and Papillon Resources were the top picks, with peer Ampella Mining raised to sector perform from underperform.

Papillon’s price target was boosted by 42% to $2.70.