The cost of gold in the world market for the first quarter of this year rose by 9.2% to 1980 dollars per troy ounce, and during trading last Thursday and for the first time since March 2022 crossed the threshold of $ 2,050. In this case, a significant correction is unlikely to wait until at least the fall.

Among the growth factors, experts call fears about the impending recession in the U.S. and the revealed problems in the banking sector in America and Europe. According to the World Gold Council (WGC), exchange-traded gold-backed funds (ETFs) saw a net inflow of 32 tons of gold worth $1.9 billion in March. Global ETF reserves stood at 3,443.8 tons (110.7 million ounces) of gold at the end of the month. The main driver of change, according to experts, was the banking crisis.

At the same time, the activity of central banks to replace the dollar with gold in reserves is continuing. According to the International Monetary Fund (IMF), the central banks only in February bought 52 tons of gold in reserves, in January – 74 tons. And in 2022, world reserves of banks added to 1136 tons. And the year was a record for 55 years – the entire history of observation.

However, experts believe that it is too early to talk about the complete replacement of the dollar in gold, because the U.S. currency is still perceived by investors as a protective asset. 

Further market dynamics will depend on how serious for the world economy and the financial system the consequences of the U.S. Federal Reserve and the ECB’s fight against inflation will be.

In case the tightening of the monetary policy and consequent pressure on the markets continues, gold may rise even higher, like in 2008, when problems in the financial sector caused gold to rise continuously up to 2012.

For example, China – after a break of more than three years – resumed replenishing its state reserves with gold in November 2022 and has already purchased more than 120 tons, 18 tons, this March. Turkey has also recently been the biggest buyer of the precious metal.

We previously reported that Chinese IPOs rose sharply after listing rules were relaxed.