bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

quizIds

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

paywallTypes

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

A RECENT jump in gold lease rates may have been caused by fresh aggressive forward selling by some mining houses who see little scope for higher bullion prices in 1995, analysts said.

    Tightening liquidity in the gold lending market pushed up one-month rates to 1.75 per cent in late January, almost double their level at the start of the year.

    Rates have since eased slightly to around 1.30 per cent.

    While analysts have suggested that a central bank sale or speculative hedge funds holding short positions may have been involved, producer activity has definitely increased, they said.

    'It may not be so much a reduction in the amount of lease gold available. Unless there is a central bank in a big forward sales programme, I would put it down to producer hedging,' said Stewart Murray, chief executive of consultants Gold Fields Mineral Services (GFMS).

    He said there might be a speculative element to the equation and that there was a feeling the spike was temporary.

    'One must remember that at the start of a new year, many producers activate new sales programmes,' one dealer said.

    Andy Smith, analyst at Union Bank of Switzerland, said heavy but not exceptional forward sales were reported when gold was trading near $385 in January, 'Contangos are attractive in all producing countries' currencies as global interest rates rise,' Mr Smith said.

    But Australian gold dealers have denied that heavy forward selling by the country's miners was to blame.

    'Australian producers have been selling this week at slightly higher prices due to the Australian dollar but the rates went up before this,' one dealer said yesterday. 'This could have been caused by the funds,' he added.

    According to brokers Macquarie Equities, Australian miners are hedged at record levels - equivalent to over two years production. Australia produces about 270 tonnes a year.

    'We have seen good selling from the Australians over A$500 (about HK$2,875) an ounce - this seems to be the magic number for them,' one London bullion dealer said.

  'They have certainly had currency factors on their side.'   Gold was fixed steadily at $376.55 an ounce on Friday, giving a price in Australian dollars at A$511.06, up from below A$490 at the beginning of the year.

    Rampant bullish sentiment had largely evaporated and the widely held 1994 view among dealers that US$400 would soon be breached looked increasingly unlikely, analysts said.

    At the end of last year, Mr Smith forecast the price would stay below $400 in 1995 and dip as low as $350.

    'This general bearishness may be causing miners worldwide to re-think their strategies and lock in more production than usual,' one analyst said.

    But Mr Murray said a gold price in the mid $370s was encouraging good physical demand. This might not give enough impetus for a strong rally, but had provided a solid floor.

    'Physical demand in the Far East is very strong. If you just looked at the physical side you would think gold was very healthy,' Mr Murray said.

    He saw a similarity with 1992, when gold was about $330.

  'We have had a couple of years of inflation and steady devaluation of the dollar. That makes $375 now not that much different from $330 then,' he said.



Hedging by gold miners suspected