Following a year of net hedging in 2014, when hedging contributed 3.33-million ounces to the gold supply, the first quarter of 2015 saw the market return to net dehedging, with the global producer gold hedge book contracting by 80 000 oz.
This return of activity to the demand side of the market came after 1.45-million ounces of net hedging in the last quarter of 2014, Société Générale and Thomson Reuters GFMS revealed in the Global Gold Hedge Book Analysis for the first quarter last week
The report further noted that the volume of the global producer hedgebook ended the quarter at 6.21-million ounces, with 29 companies becoming net dehedgers, and 16 companies adding to their delta-adjusted hedge positions over the three months.
The market-to-market value of the aggregate producer hedgebook fell by “only” $5-million during the quarter to $295-million, with Polyus Gold – through deliveries against the large hedge position entered into last year – emerging as the period’s largest dehedger.
The report described new hedging over the first quarter of the year as “modest” in scale, consisting chiefly of producers adding to existing forward sales positions.
Meanwhile, relatively little new hedging has been announced since the end of the first quarter, with the trend of small-scale hedging, often in relation to project financing and the expansion of existing programmes, expected to persist throughout the year.
Commenting on gold hedge book activity, Thomson Reuters GFMS Precious Metals Mining director William Tankard says that, while producer activity was seen to switch back to net dehedging at the margin in the first quarter, this outcome will be an outlier in the context of net hedging activity over the year as a whole, which would likely be in the order of 60 t.
“It will only take one or two meaningful hedging actions to offset the modest run rate of hedge deliveries scheduled for the remainder of the year,” he remarks.