TORONTO (miningweekly.com) - Global gold hedging fell by a larger-than-expected 1,2-million ounces in the second quarter of this year, after a slow start to the year in the first three months, consultancy VM Group said on Tuesday.

The global hedge book declined to 14,7-million ounces during the quarter.

The largest reduction in the global hedge book came from South Africa's AngloGold Ashanti, which cut 0,65-million ounces from its book, according to the quarterly 'BNP Paribas Fortis Bank/VM Group Hedging and Financial Gold Report'.

Thirty-one other companies reduced their positions, although none made a reduction greater than 0,1-million ounces.

There was just one company that increased its position - US silver-miner Coeur d'Alene added 22 500 oz of mainly sold calls, VM reported.

“Although dehedging volumes will never match those seen in previous years, AngloGold Ashanti’s continued programme has ensured that the market continues to receive support from this sector,” said report author Matthew Turner.

Barrick Gold, the largest hedger with 5,4-million ounces, made no change.

In total, in the second quarter of 2009, an estimated 32 of the 43 mining companies which had hedge commitments made reductions to those positions. Ten left them unchanged.

However, despite the reduction, the pace of dehedging is declining, as the outstanding positions shrink.

On a year-on-year basis, dehedging in the second quarter amounted to four-million ounces, “the lowest it has been since we began collecting detailed quarterly records in 2001”, VM said.

At that time, the global hedge book was over 100-million ounces, but gold miners have moved to reduce their positions in order to take advantage of rising bullion prices.

Looking ahead, dehedging is likely to continue at a “modest” pace for the rest of the year, as AngloGold Ashanti has already announced a further 0,74-million ounces in the third quarter and has promised further reductions to 4,1-million ounces by year-end

As a result, VM has slightly increased its full-year forecast to between two-million and four-million ounces of dehedging.

The previous forecast called for global dehedging of between one-million and three-million ounces in 2009.

On the exchange-traded fund (ETF) front, the world's 16 physically-backed gold ETFs saw inflows in the second quarter of just 47,3 t, much lower than the “remarkable” 458,3 t reported in the first quarter, VM commented.

“July was worse yet as, thanks mainly to the SPDR fund, there was an outflow of 41 t.”

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