Global Gold Hedge Book at Lowest Level in over 20 Years

Source:

“The second quarter saw a reversal in the trend of hedge book sensitivity: a significant retracement in the gold price would now increase the implied delta of the net options position – the opposite relationship to that of recent years,” noted GFMS in its Societe Generale Gold Hedge Book Analysis.

The gold sector continued to see strong evidence of producer de-hedging in the second quarter, and 4,06-million ounces of the precious metal was removed from the global book, said consultancy firm GFMS.

The London-based GFMS added that the global hedge-book was left standing at 18,81-million ounce at the end of June, which it estimated was the lowest level since 1987.

However, the quarter had held relatively few surprises, as many of the activity had been flagged to the market in the first quarter, particularly AngloGold Ashanti reducing its hedge book by some 2,71-million ounces.

“The second quarter saw a reversal in the trend of hedge book sensitivity: a significant retracement in the gold price would now increase the implied delta of the net options position – the opposite relationship to that of recent years,” noted GFMS in its Societe Generale Gold Hedge Book Analysis.

“The marked-to-market value of the global book fell to a negative $9,8-billion, as the end-quarter gold price stagnated and the book was reduced strongly – largely due to a large bullion purchase by AngloGold Ashanti to effect their hedge closure, which globally depressed the global average,” continued GFMS...

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