Jefferies has increased its forecasts for both gold and silver in the near to mid-term.

The bank upped its forecast for average third quarter gold prices by 5.5% to US$1,925/oz, and for 2020 as a whole by 5.7% to $1,843/oz. The bank said it expected prices to strengthen further into the New Year.

"Interest rates are expected to remain a supportive factor in the medium term, with the view the Fed will keep rates near zero through 2022," said Jefferies.

The bank noted that over the past 12 months, the correlation between the gold price and the inverse of the US 10-year real rate has been a 0.98, "well above an already strong historical correlation of 0.75".

While the bank was bullish on the yellow metal out to 2021, it acknowledged a further recovery in global growth "would likely be a negative for gold and is one reason why we forecast a decline in the gold price after 2021". The bank forecast an average price of $2,000/oz in 2022.

Jefferies said its favourite gold major was Newmont, "followed closely by Barrick". However, it said better value was to be had in copper mining equities, especially Freeport and First Quantum.

Jefferies also tweaked its silver forecasts upwards, increasing its expected average third quarter prices by 31.6% to $25/oz, and for 2021 by 50% to $30/oz.