Gold shares rallied Thursday afternoon alongside the yellow metal, as the Market Vectors Gold Miners ETF (GDX) climbed $0.76, or 1.3%, to $57.32 per share.  COMEX gold futures rose $10.00 to $1,759.50 per ounce amid broad-based gains in precious metals.  With its advance, the GDX reached its highest level since December 9, 2011 and extended its year-to-date ascent to 11.5%.

Despite the sector’s rebound in recent weeks, gold shares on average are pricing in a gold price of only $1,350 per ounce, according to Macquarie’s equity research team.  In a recent report to clients, analysts led by Tony Lesiak forecasted that the sector will produce a 29% return over the next 12 months.

The firm went on to note that “The gold sector is experiencing increasingly divergent share performance which is making stock selection more important.”

Macquarie  also updated its forward gold price curve – which consisted of increasing its target for the yellow metal by between 7% and 9% between 2012 and 2016, and by 11% in the long-term (2017+).  As a result, the firm raised its target prices on the following gold stocks:

Barrick Gold (ABX.TSX) – from C$70.00 to C$72.00, Outperform rating maintained

Eldorado Gold (ELD.TSX) – from C$16.50 to C$17.00, Neutral rating maintained

Goldcorp (G.TSX) – from C$62.00 to C$63.00, Outperform rating maintained

IAMGOLD (IMG.TSX) – from C$22.50 to C$24.00, Outperform rating maintained

Kinross Gold (K.TSX) – from C$14.50 to C$15.50, Neutral rating maintained

OceanaGold (OGC.TSX) – from C$3.00 to C$3.25, Outperform rating maintained

Yamana Gold (YRI.TSX) – from C$16.50 to C$18.00, Neutral rating maintained