Financial Daily from THE HINDU group of publications
Wednesday, Nov 12, 2003
Financial Daily from THE HINDU group of publications Wednesday, Nov 12, 2003 |
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Agri-Biz & Commodities
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Precious Metals Gold dehedging slows down in third quarter Our Bureau
Mumbai, Nov. 11 THE pace of dehedging in gold slowed in the third quarter of the year. Following seven consecutive quarterly declines in the delta-adjusted hedge book, the moderate increase represented the first rise in the global book since the third quarter of 2001, London-based Gold Fields Mineral Services Ltd (GFMS) said in its global hedge book analysis report for third quarter of 2003. The increase in the delta-adjusted vanilla options, combined with the fact that a number of producers rolled over contracts to increase their participation in the spot price, resulted in a net increase in the delta-adjusted hedge book, the report explained. Delta hedging is a hedging scheme that is designed to make the value of a derivatives portfolio insensitive to small changes in the price of the underlying. Q3 saw gold prices make further gains with the average for the period up 5 per cent on the previous quarter and up a yet more buoyant 16 per cent on Q3 of 2002. The level achieved, $363.09 was in fact the highest quarterly average since the last quarter of 1996. During the third quarter, the market rallied quite steadily, climbing almost $50 from a mid-July low of $342.50 to a late-September high of $390.70. Speculative investor interest remained keen in Q3 of 2003 and this proved sufficiently strong to counter the slowdown in de-hedging and patchy physical demand, the report pointed out. Despite the slowdown in nominal producer dehedging, lease rates remained sluggish for much of Q3, save for a short-lived spike in August. Their lethargy was testament to the market's more than ample liquidity, itself largely the result of the `stickiness' of central bank lending.
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