Gold prices are up 29% so far this year after hitting a record high of $3 500 per troy ounce in April on geopolitical tensions and economic uncertainty as United States (US) President Donald Trump continues to roll out his tariff policies.

The price rally has so far kept purchases by central banks, a crucial category of demand, unaffected with the first-quarter buying in line with the 2022-24 quarterly average, Metals Focus said in its annual report on Thursday.

"The drivers that have underpinned de-dollarisation in recent years remain firmly in place," the consultancy said.

"If anything, President Trump's unpredictable policy stance, his public criticism of (Fed chair) Jerome Powell and the deteriorating US fiscal outlook have further eroded confidence in the US Dollar and Treasuries as ultimate safe-haven assets."

"Elevated geopolitical tensions since the start of his administration have also curtailed the appeal of US assets."

Accounting for almost one-fourth of total demand, central banks are the third largest category of gold consumption after the jewellery sector and physical investment. In 2025, purchases from central banks are expected to fall by 8% from last year's record high of 1 086 tons.

In January-March, Poland, Azerbaijan, and China, consistent buyers in recent years, led the officially reported buying, Metals Focus said, adding that steady inflows into Iran also suggest further purchases by the Central Bank of Iran.

--Reuters--