Citi: Here's the best way to play gold's rally

Melted gold flows out of a smelter into a mould of a one kilogram bar at a plant of gold refiner and bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio.
Arnd Wiegmann | Reuters

Investors looking to chase the strong rally in gold this year may be better off purchasing a select group of gold mining stocks instead, Citi told clients this week.

"Gold prices have improved, but gold miners do not yet believe in its longevity. This is typically a sweet spot of the cycle with cash flows rising but the miners still focused on cost cutting and capital discipline," Citi analyst Alexander Hacking wrote in a research note Monday.

This year, bullion is among the best-performing commodities, trading at a fresh two-year high of $1,370 per ounce, up 29 percent in 2016.