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Recent history reinforces the notion that the December quarter is traditionally a weak one for gold. Over the last 10 years December quarterly returns have averaged -2.8% and so far we are down -2.4% in the December 2020 quarter to date.

The consensus on the gold price had become almost universally positive. We had also noted over the last few weeks that silver had finally begun to outperform gold – one of the last elements that had been missing from the bull market landscape and signalling to us the further maturation of positive gold market sentiment.

In this report, we look at the hedge book positions of key ASX-listed producers to estimate what proportion of production is hedged and to what degree it discounts their gold revenues against an assumed spot price of A$2,700/oz.

If there is one thing that the last couple of months has brought it is increased volatility. Fortunately, in the precious metals space, it has been skewed to the upside.

Key drivers of energy markets will be US-China trade tensions and the potential for a resolution, European economic activity, and supply constraints as new projects are subjected to increasing environmental and social scrutiny.

The macro issue of US-China trade tensions have dominated underlying market fundamentals. Key demand metrics have weaken over the course of 2019 due to poorer sentiment and the actual impact of trade restrictions.