Small-scale gold hedging likely to stay
Deliveries into existing gold hedge positions slightly outweighed fresh hedges, leading to overall net de-hedging of 5t in Q2. De-hedging for H1 totaled 22.5 tonnes, in stark contrast to the 72.5 tonnes of hedging in H1 2016. The global hedgebook now stands at 228 tonnes, 22% lower yoy. Higher local prices in April and June triggered hedging by some Australian and Canadian mines: for example, in June, Gold Fields announced it had hedged 75% of its H2 2017 Australian output to protect cashflow during construction of the Gruyere project. Project and debt financing were again the primary motivations for gold hedging rather than any change in sentiment. But sporadic small-scale hedging, which can be useful for managing financing needs, is likely to remain a feature of the industry.