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Gold renews climb as producers eyed, PGMs soar

NEW YORK: Comex gold futures rebounded back past $300 an ounce in volatile trade on Wednesday, amid talk of producer purchases and jitters that Ghana's troubled Ashanti Goldfields was on the brink, dealers said.

After tumbling from four-month highs set Monday, bullion climbed back as the market buzzed that one or more producers were unwinding forward hedge sales, booked when gold was tumbling last year to protect prices for future mine output.

Comex April gold closed up $6.90 an ounce at $308.60, the middle of its $301.70 to $314.00 range. Spot bullion was quoted late at $305.00/6.00, off London's afternoon fix at $308.60 but up from Tuesday's $298.00/$300.00 close.

"There is talk about Ashanti's hedge book being steadily bought back," said a bullion dealer. "It's unclear at this stage."

Hedging was profitable when bullion was headed toward its 20-year low of $251.70 an ounce last August. But it caused huge losses and shareholder revolts against some mining companies when prices soared after the Sept 26 agreement by European central banks to limit gold sales for five years.

Ashanti, Africa's third-largest gold company, has been linked to rumoured buybacks since gold surged last week, when the company won a fourth short-term reprieve on margin payments owed to its derivatives counterparties since last year.

Ashanti's position flipped from up $290 million to a loss of $570 million during the spike to near $338 on Oct 5.

A Ghanaian court on Wednesday said that Ashanti should convene an extraordinary general meeting within 21 days to consider the composition of its board.

The ruling said the miner should also refrain from new financial undertakings until after the meeting, which the company's lawyers said could destroy the company. It remains unclear how much of Ashanti's hedge book has been unwound.

"If any further news comes out to back up that story and with just the way it reads, we'll probably be $10 higher tomorrow," said Carlos Perez-Santalla of Hudson River Futures.

Gold topped at $326.90 basis April and $319 spot on Monday, before backtracking on news that Canada's Barrick Gold Corp. was sticking with a scaled-back hedge programme.

Fellow Canadian miner Placer Dome Inc. and South Africa's giant AngloGold Ltd. issued tougher repudiations of hedging.

AngloGold, the world's largest mining company, releases its quarterly results on Thursday and the market is waiting to see if it adds to Monday's statement that it had cut the size of its hedge position over the last four months.

But Australian mining companies seem happy to hedge into a rising gold price, which was nearly A$500 on Monday, up from around A$422 in early January.

"This represents good selling in Aussie dollar gold terms. It's fair to say that the Aussie dollar gold producers are not suffering from this shareholder consciousness," said the bullion dealer.

March silver rose 9.0 cents to $5.43 an ounce in a range of $5.33 to $5.46. Spot silver was last at $5.34/37, compared to the fix at $5.3625 and the previous close at $5.26/29.

Meanwhile, Nymex palladium for March delivery settled at $590.15 an ounce, up $10.35 since Tuesday and almost $150 year-to-date. It hit a record $598 chased by panicky consumers and funds facing an acute shortage from top-producer Russia.

April platinum soared $31.10 to $529.60 an ounce, the highest close on a continuation basis since December 1989.

"Demand is still solid for both metals. But the speculators are certainly, I think, exaggerating the price volatility," said a dealer at a metals refinery.

Russia supplies around 70 percent of the world's annual palladium needs and 20 percent of its platinum. Both metals are used to clean vehicle exhausts, but palladium is more efficient in most engines.

Red tape has delayed Moscow's signing off on shipments to the West, where the booming auto industry has furiously accumulated the metals to use in catalytic converters. Sky-high prices are hurting car makers but no viable substitutes are seen emerging soon, analysts said.

In London, palladium was fixed in the afternoon at a new all-time high of $580.00 an ounce, while platinum was fixed at $548.00 an ounce, its highest since April 1989.-Reuters