LONDON, Oct 29 (Reuters) - Gold miners are likely to keep cutting their forward sales of the metal this year after reducing outstanding positions by another 16 tonnes in the second quarter, Societe Generale and Thomson Reuters GFMS said on Tuesday.
The outstanding volume of gold delta-hedged against producers’ hedge contracts fell by 529,000 ounces (16 tonnes) in the second quarter, according to the Global Hedge Book Analysis prepared by SocGen and GFMS.
That took the remaining global hedge book to 3.09 million ounces (96 tonnes), its lowest since the data series began in 2002, the report said.
Hedging future output allows producers to lock in prices but can backfire if spot prices rise above the hedged price. During the financial crisis, miners lost millions of dollars closing out hedged positions as the gold price rallied.
That has left them wary of adding new positions, even after gold prices fell 20 percent this year.
The report showed that 29 companies cut their delta-adjusted positions in the three months to end-June, led by Crocodile Gold with a 270,000 ounce (8 tonne) reduction, while 15 companies increased their positions.
Two-thirds of the added delta-adjusted hedging was attributable to increases at Vancouver-based B2 Gold Corp , Mexico’s Minera Frisco and OceanaGold , which operates primarily in New Zealand, the report said.
“Evidence of new hedging activity subsequent to the end of Q2 has been limited so far; producers have instead been seeking to protect margins through cost-containment measures,” it said.
“Consequently, we expect the overall trend of global net de-hedging to persist throughout the remainder of 2013.”