Date:18/08/2004 URL: http://www.thehindubusinessline.com/2004/08/18/stories/2004081800401300.htm

Back Producer gold de-hedging gathers pace in Q2

Our Bureau

Mumbai , Aug. 17

PRODUCER de-hedging of gold accelerated in the second quarter of the year as reflected in the slashing of outstanding producer hedge positions by 3.4 million ounces (106 tonnes).

In its latest hedging report, the London-based GFMS Ltd, a reputed precious metals consultancy, attributed the marked decline in the hedge book to reduction in nominal contract volumes.

Apart from the ongoing delivery into existing positions and buybacks, the two other major events in the June quarter were the AngloGold-Ashanti merger, which resulted in the integration of the industry's third and fifth biggest hedge books to create the world's second largest hedge book; and secondly, Newcrest's book restructure, the consultancy said.

Realised prices (for all the companies that reported this data) averaged $387 an ounce - roughly $6/oz lower than the period average spot price.

Prices ranged from a low of $322/oz to a high of $447/oz with just over 60 per cent of mine production delivered at prices lower than spot.

Producers with hedge books achieved a weighted average price of $385/oz (close to $8/oz lower than average spot), while their unhedged counterparts secured an average of $394/oz (or $1/oz higher than spot), the GFMS release said.