(Kitco News) – The global hedge book for gold producers expanded modestly by a net 500,000 ounces, or 16 tonnes, during the third quarter, largely driven by companies with operations in Australia as they apparently took advantage of a higher gold price in that country’s currency, according to a report released Thursday by the GFMS team at Thomson Reuters and Societe Generale.

The global hedge book stood at 6.2 million ounces, or 193 tonnes, as of the end of September.

“The third quarter of 2015 saw the producer hedge book back to net hedging as a handful of Australian producers continued to lock in favorable Australian-dollar-denominated gold prices,” said Dante Aranda, analyst for precious-metals mining at the GFMS team at Thomson Reuters.

“However, given the price and FX (foreign-exchange) moves during the fourth quarter, we expect the broader trend in the rundown in the hedge book to continue. So with 32 tonnes of scheduled deliveries in Q4, and unfavorable conditions for fresh hedging, we expect modest net de-hedging for 2015 as a whole.”

Much of the hedging in the third quarter was tied to the depreciation of some 25% by the Australian dollar against the U.S. dollar since late 2014. As a result, during 2015, the gold price in Aussie terms was only 10% to 20% below the all-time high from 2011, whereas gold in U.S. dollars was 30% to 44% weaker during that same time frame, the report said.

“It is interesting to note though that these recent small bouts of tactical hedging has recently been so concentrated in AUD terms, and that similar trends have not yet become evident in the case
of, for example, South African rand-denominated production, given the ZAR gold price has recently rallied to fresh all-time highs,” the report said.

During the third quarter, 15 companies increased their hedge position while 24 reduced it.

The biggest changes were hedges being entered into by Evolution Mining and Metals X, which between them accounted for roughly two-thirds of gross hedging, the report said. Polyus Gold, which delisted from the London Stock Exchange in November, was described as the largest de-hedger for the period.

The marked-to-market value of the aggregate global hedge book at the end of September stood at
$337 million, an increase of 16% from the end of June.

Barring any unannounced large hedges that were made in the fourth quarter, the report’s authors say they anticipate that producers collectively reverted back to de-hedging, with net de-hedging preliminarily estimated somewhere between 5 and 15 tonnes in the October-December period.

By Allen Sykora of Kitco News; asykora@kitco.com