Beijing time this afternoon (May 5), the World Gold Council released the latest "Global Gold Demand Trends Report". The data shows that in the first quarter of this year, the total global gold demand was 1,174 tons, and the gold purchase demand from the central banks of many countries increased significantly.

　　The World Gold Council data shows that global central bank gold reserves increased by 228 tons in the first quarter, with Singapore, China and Turkey adding the most to their gold reserves. 

　　World Gold Council China CEO Wang Lixin: In the first quarter of this year, the global central banks' gold demand reserves are growing, and the growth is the highest increase in reserves in the first quarter since the historical records of gold reserves are available.

　　By the end of March 2023, the world's gold reserves totaled 35,815.83 tons. Among them, the United States, Germany, Italy, France, Russia and China ranked the top six in the world in terms of gold reserves.

　　Reducing dollar dependence and other reasons become an important driving force to increase gold holdings

　　In recent years, the central banks of many countries have been increasing gold reserves, gold purchases continue to hit record highs, and this trend is still continuing in the first quarter of this year. What kind of signal has been released by the central banks of many countries to purchase gold in a big way?

　　The World Gold Council's analysis suggests that the role of gold as a safe-haven asset continues to come to the fore against a backdrop of banking sector turmoil, ongoing geopolitical tensions and a challenging economic environment.

　　Wang Lixin, CEO of the World Gold Council China: Gold's traditional anti-risk and anti-inflation capabilities, as well as gold's high degree of liquidity, have contributed to central banks' reawakening and reappreciation of gold.

　　And over the past year, geopolitical tensions have brought global inflation to a new high in more than 40 years, pushing central banks to increase their gold holdings to a new high. Analysts believe that, in addition to the economic environment and geopolitical considerations, seeking to diversify foreign exchange reserves and reduce overdependence on the U.S. dollar to deal with the instability of the dollar-centric international monetary system is also an important motivation for some central banks, especially those in emerging market economies, to increase their gold holdings. 

　　Zhu Bin, chief economist of South China Futures: The United States in these rounds of quantitative easing policy situation, resulting in a decline in the purchasing power of the dollar, people are worried about the loss of purchasing power of bonds held in the United States. The U.S. has frozen Russia's overseas assets in order to sanction Russia, which has caused significant psychological trauma to all non-U.S. ally countries. The purchase of gold assets by other central banks is really a loss of confidence in the dollar as a safe asset.

　　To ensure the safety of assets, many central banks increase their gold holdings to replace the dollar

　　In fact, the central banks of many countries have experienced a turnaround in their gold reserves from selling to large and consistent purchases. What is the reason that countries have changed their attitude towards gold reserves?

　　Until the financial crisis broke out in 2008, the world gold reserves had been on a declining trend. After the 2008 financial crisis, central banks began to change their attitude toward gold, from "net sellers" to "net buyers", and over the next decade or so, as central banks continued to buy gold, the world's gold reserves continued to climb. By 2022, central bank gold purchases rose 152.31% year-on-year to 1,135.69 tons, already accounting for 23.96% of the world's total gold demand.

　　Zhu Bin, chief economist of South China Futures: Now it is found that dollar assets are not the safest assets in the world and may be frozen, so that they are looking for a safe asset. It just so happens that gold is an asset that is not controlled by the government, and relatively speaking has the possibility of being a safe asset. Many central banks are now using gold as a safe asset alternative to the dollar and are buying a lot of gold, at which point they are not concerned about the rise and fall of the dollar, nor are they concerned about whether the interest rate on the dollar is falling or rising, they are concerned about safety, over and above its economics.

　　The World Gold Council expects central bank gold purchases to continue to be strong, and even though they may be lower than the all-time highs of 2022, they could still be the cornerstone of gold demand throughout 2023.