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Global gold hedgebook cut by 16 pct in Q2-Fortis

LONDON, 7 Aug 2008(Reuters) By Jan Harvey

Gold miners cut their hedging positions by 16 percent in the second quarter of 2008, but the dehedging rate is expected to slow significantly in the remainder of the year, a report said on Thursday.

Miners bought back 3.5 million ounces of hedged gold in the second quarter, bringing the total global hedgebook to 18.7 million ounces, it said.

Anglogold Ashanti (ANGJ.J: Quote, Profile, Research, Stock Buzz), the world's third largest gold miner, led the dehedging, buying back 2.7 million ounces of gold in the second quarter.

Thirty other companies also cut their hedgebooks during the quarter, by a combined 800,000 ounces. Sino Mining, Barrick, Newcrest and Lihir/Equigold all cut their positions by more than 100,000 ounces.

The quarterly report, produced by VM Group and Haliburton Mineral Services and sponsored by Fortis Bank, said it expects dehedging to tail off in the remainder of the year, with second-half dehedging expected to reach only 2-4 million ounces.

Anglogold Ashanti has only 800,000 ounces of the dehedging programme it announced in the second quarter still to complete, it said.

"Anglogold Ashanti's enormous second-quarter dehedge means the global total has fallen sharply," said Matthew Turner, VM Group analyst and author of the report.

"However, as most of their dehedging programme is now completed, barring any big surprises from them or other companies, the rate of global dehedging will slow sharply from now on."

Hedging allows producers to lock in prices for future output, but it can backfire if metals prices rise above the hedged price.

A sharp rise in the price of spot gold, which has more than doubled in the last three years, has prompted producers to reduce their hedging positions.

(Reporting by Jan Harvey; Editing by Michael Roddy)

© Thomson Reuters 2008 All rights reserved

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