Investec has downgraded its ratings for both Randgold Resources and Centamin from 'buy' to 'hold', saying that its time to "take a breather (and profits)" in the gold mining sector.

"In a gold sector report earlier this year we lifted all of our gold company recommendations to 'buy', on the basis that the gold bullion price would increase and gold equities would outperform," the broker said in a research report on Wednesday.

"Gold equities have indeed performed well, appreciating by an average 28% since then. Whilst we are raising our estimates and price targets, given the sector's outperformance, we now recommend that investors take profits at current levels, on the basis of buying again at lower levels."

The broker has increased its long-term gold price forecast by 8% to $1,350 an ounce, reflecting its estimate of the "average inducement price for new operations, when considering the all-in costs of production".

For the large UK-listed gold producers in Africa (Randgold, Centamin and African Barrick Gold), the increased price assumption has lifted Investec's forecast for 2013 EBITDA (earnings before interest, tax, depreciation and amortisation) by an average 22%. The 2014 EBITDA estimate has been hiked by an average 31%.

As such, the target prices for the three stocks have been lifted: Randgold's target has been raised from 6,917p to 7,715p; Centamin's has been raised from 95p to 106p; while African Barrick's has been raised from 485p to 530p.

However, given the recent outperformance, the broker says that upside to its new target prices is "quite modest". All three stocks are now given a 'hold' rating, with African Barrick having been downgraded earlier.

BC

Related share prices
Randgold Resources Ltd. (RRS) share price
Centamin (DI) (CEY) share price
African Barrick Gold (ABG) share price