Risk of vicious circle for gold as hedging returns

``London-listed gold producer Petropavlovsk has said it will pre-sell 55pc of its future output planned for the second quarter of 2014, at an average price of $1,408 an ounce... this may signal the return of "structural hedging" across the industry, with other companies scrambling to lock in forward contracts. "This could increase the pressure on the spot gold price over the coming years," [Broda] said. The risk is a vicious circle as hedging leads to lower prices, leading to more hedging.'' -- This could be a game-changer that could serve to suppress gold for quite a bit longer (like, years). However, since it was most likely that surreptitious central bank gold leasing was the main capper of gold in the 90s, it's unlikely mere gold producer forward-selling could have such an extensive impact this time.