In the second quarter many companies mining for gold apparently took advantages from price increases for hedging purposes. According to the report of Thomson Reuters GFMS, gold mining companies have entered into forward contracts for 21 tons of gold additionally to protect themselves from drops in prices. In aggregate, at the end of June 295 tons of future golden mine output was hedged, which is almost four times more than at the beginning of 2014, when for the first time in many years, companies started to hedge products against drops in prices again. However, one should not attach too much importance to this fact, because in the first years of the past decade at the beginning of the bull market for gold, hedging activity was many times as high, and the level of miningwas much lower. Nevertheless, the growth in popularity of hedging is an expression of certain skepticism among the participants in the spot market regarding gold prices dynamics in the medium term. Positioning on the Comexof the so-called commercial market participants (such as gold dealers and extracting companies) currently has a more negative orientation than almost ever. For comparison, at the beginning of this year, the level of pessimism was at its lowest level since 2001. However, we believe that gold mining had not been playing a major role in determining the price in the gold marketfor many years, as gold becomes rather the investment metal than the metal for manufacture of precious metal wares more and more. Accordingly, the trend of prices is imposed primarily by such financial market indicators such as investor sentiment, exchange rates and interest rate trends.
Source: Uncommercial joint ownership "Trans-regional Association of precious metals producers"