Global gold hedges, or sales of future production, gained the most in more than four years in the second quarter, researcher GFMS Ltd. said.
The worldwide hedge book gained about 160,000 ounces to 7.19 million ounces in the quarter, GFMS said in a report. That’s the first and biggest increase since the fourth quarter of 2005, GFMS mining analyst Matthew Piggott said by telephone from London.
Gold producers sometimes sell future output at fixed prices to secure loans. They can reduce hedges by buying back contracts, adding to demand. AngloGold Ashanti Ltd., Africa’s largest gold producer, said this month it raised about $1.58 billion through the sale of shares and convertible bonds, and will use the funds to buy itself out of forward-sales agreements that stop it benefiting from record prices.
“There is yet to be a discernible swing by producers towards a renewed appetite for strategic hedging, with the new hedges seen in the second quarter based around project finance,” GFMS said in the report with Societe Generale SA. “Once AngloGold Ashanti has cleared its hedge book, it will then be impossible for further weighty cuts to be made to the outstanding book.”
Johannesburg-based AngloGold Ashanti de-hedged about 290,000 ounces in the second quarter, the researcher said. AngloGold said last year that it would cut its hedge book by about 800,000 ounces a year.
Producers will de-hedge about 4.21 million ounces this year, GFMS estimates. Still, gold miners will return to hedging, according to 77 percent of participants in a survey at a London Bullion Market Association conference in Berlin on Sept. 28.
Gold for immediate delivery had reached a record $1,313.45 an ounce by 5:12 p.m. in London yesterday. Prices have gained 20 percent this year.