LONDON (Reuters) - Gold hedging positions of mining companies fell 18 percent to 22 million ounces in the first quarter of 2008, a report said on Friday, forecasting a full-year drop of 10-12 million ounces.

Hedging allows producers to lock in prices for future output, but it can backfire if metals prices rise above the hedged price. High gold prices have prompted producers to lower their hedging positions.

The report sponsored by Fortis Bank said the decline was mainly due to four gold mining companies.

AngloGold Ashanti reduced 1.2 million ounces of hedging, Barrick cut 1.1 million ounces, Buenaventura closed out their entire hedging positions of 0.9 million, while Newcrest removed 0.7 million ounces.

The report, prepared by the VM Group and Haliburton Mineral Services, said hedging positions could fall to just 15-17 million ounces by the end of 2008, after considering AngloGold's announcement to close another 3.8 million ounces of hedges.

It also said that exchange-traded funds suffered in April, with gold held by StreetTRACKS, the world's largest gold-backed ETF falling 62.50 tonnes.

Official sector sales of gold have slowed as the signatories of the Central Bank Gold Agreement struggle to reach a combined sales limit of 500 tonnes a year.

"Unless a central bank such as that of Spain or Portugal resumes sales, it is likely that collectively they will undershoot the limit by over 100 tonnes," the report said.