Demand for gold among central banks hit a record high in the first quarter, even as overall global demand presented a “mixed picture,” according to data from the World Gold Council (WGC), CNBC reported, taken from News.ro.

Gold prices breached the $2,000 an ounce mark this week and are near record highs as global economic uncertainty, a possible pause in interest rate hikes by the Federal Reserve and potential further trouble in the US banking sector prompt investors to turn to the precious metal.

Central banks are buying up hundreds of tons of gold

The WGC’s quarterly report on gold demand trends, published on Friday, showed that demand (excluding exchanges) fell 13% in the first quarter compared to the same period last year, although base effects were in place given the strong year-on-year demand growth since investors fled risky assets after Russia’s invasion of Ukraine.

In the three months to March, central banks added 228 tonnes of gold to global reserves, the biggest buying volume in the first quarter since the data series began in 2000, although it was a smaller increase than in recent quarters.

Louise Street, senior market analyst at the World Gold Council, told CNBC on Thursday that this is a continuation of trends that have seen central bank gold purchases rise to an 11-year high in 2022.

The WGC expects demand among central banks to ease this year after peaking in 2022, although it noted that while previous purchases had focused on emerging markets, more developed financial centers are now increasing their demand.

Singapore, China, Turkey, India are big buyers of the precious metal

The Monetary Authority of Singapore (MAS) was the biggest single buyer during the quarter, adding 69 tonnes of gold to its reserves, now 45% higher than at the end of 2022.

The People’s Bank of China (PBoC) added 58 tonnes during the quarter and now holds 2,068 tonnes of gold in its reserves, representing 4% of the world’s total recorded gold reserves.

Turkey was again a big buyer, increasing its gold holdings by 30 tonnes, while India’s central bank added just 7 tonnes.

Chinese consumers bought 198 tonnes of gold jewelery during the quarter, accounting for 41% of the global total, as demand rebounded after the lifting of zero-sum measures against COVID-19, although high and volatile prices weighed on demand in India, which posted its weakest first quarter for the last three years.

Overall, jewelry purchases were relatively stable in the first quarter, with China offsetting the decline in India.

Bank failures cause increased investment

On the investment side, the WGC saw a marked uptick in demand for gold in March following the collapse of Silicon Valley Bank, the first of what has become a series of collapses in the US banking system among regional institutions exposed to higher interest rates.

Economists told CNBC this week that more trouble could be expected after the latest crisis, when JPMorgan Chase bailed out First Republic Bank.