Aug. 3 -- Global gold hedges, or sales of future production, gained about 4.1 percent in the first quarter, researcher GFMS Ltd. said.
The worldwide hedge book increased about 190,000 ounces to 4.88 million ounces from 4.69 million ounces in the fourth quarter of 2010, London-based GFMS said in an e-mailed report with Societe Generale SA. That’s the second quarter that miners added to supply in the last five years, GFMS said.
Gold producers sometimes sell future output at fixed prices to secure loans. They can reduce hedges by buying back contracts, adding to demand. Bullion for immediate delivery traded at $1,638.20 an ounce by 5:31 p.m. in London yesterday after reaching a record $1,643.18. It’s up 15.4 percent this year and set for an 11th straight annual gain, the longest winning streak since at least 1920 in London.
While some recent comments from miners “may suggest a slightly more balanced attitude towards hedging than outright dismissal of the idea, as has been the trend in recent years, there has not been a fundamental shift back to widespread hedging,” the researcher said in the report. “As such, we do not expect a concerted return to hedging in 2011.”
Producers boosted supply by 1.66 million ounces compared with a year earlier after hedging and mine output increases, GFMS said. Companies will de-hedge about 800,000 ounces this year, leaving the total hedge book at 3.88 million ounces, the researcher estimates.
Mining company Boliden AB (BOL), based in Stockholm, added about 330,000 ounces of forward sales in the first quarter, while Toronto-based miner Kinross Gold Corp. (K) cut about 90,000 ounces from its hedge book in the period, GFMS said.