NEW YORK Dec 1 The rate at which gold miners
cut their hedging positions rose to 3.18 million ounces in the
third quarter, up from 980,000 ounces in the second quarter,
driven by Barrick's decision to eliminate its entire hedge
book, an industry report said.
The quarterly report by Societe Generale and metals
consultancy GFMS Ltd said that the sharp reduction left the
global gold hedge book at 11.55 million ounces.
Hedging allows producers to lock in guaranteed prices for
future output, but it can backfire if the price of spot metal
rises above the hedged price. Buying back of outstanding hedge
positions was a key element of demand in past years.
The report was released on a day when Barrick Gold Corp
(ABX.TO), the world's No. 1 gold producer, said it has
completed the elimination of all of its gold hedges as planned,
a move that should remove what has been a big drag on its
De-hedging by Barrick and AngloGold Ashanti (ANGJ.J)
accounted for 85 percent of the total hedge elimination during
the third quarter, the report said.
"Regarding fresh hedging, we still do not see strong signs
of a return to outright hedging activities by producers
potentially eager to lock in historically high prices, and
would argue still that this would currently be frowned upon by
investors," the report said.
(Reporting by Frank Tang; Editing by Marguerita Choy)
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