Gold Producer De-Hedging Will Stop Supporting Prices

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Gold producers’ de-hedging of gold exposure, in response to rising prices, may have given the rally extra legs

Producers have de-hedged so much over the last year and a half that there might not be many hedges left to unwind further.

Barrick Gold’s recent announcement to remove its hedges could thus be the tail-end of a process that has run its course.

Commodity Online: Moves by Barrick and others to close out their forward-sales contracts bolsters gold prices, and may even have helped lift bullion to more than $1,000 last week, said Banc of America Securities-Merrill Lynch analysts in a report released Monday. But they noted the de-hedging trend is likely to provide waning support to gold prices. “With Barrick’s announced de-hedging the global hedge book has now been mostly eliminated,” said analysts led by Michael Widmer.

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