China's gold jewelry consumption reached 198 metric tons in the first quarter, up 11 percent year-on-year (56 percent quarter-on-quarter), marking the highest level for the quarter since 2015, the World Gold Council said on Friday.

The WGC attributed the rise to a recovering economy and pentup demand as China optimized its COVID-19 control measures.

Wang Lixin, the regional CEO of the WGC (China), said: "Pentup demand for gold jewelry used for weddings improved thanks to the optimization of COVID-19 control measures. More consumers are also turning to gold compared with other jewelry given its perceived safe-haven status."

Wang said demand for hard, pure gold jewelry products, a type of pure gold products featuring relatively lighter per-piece weight, saw soaring demand in the first quarter thanks to their extra hardness, stylish designs and affordability amid the rise of gold prices. While heritage gold jewelry, a type of pure gold products featuring local cultural designs and Chinese traditional elements, retained a vital share of the market.

Investment demand in the gold bars and coins segment also soared in China. Gold bar and coin sales totaled 66 tons in the first quarter, up 34 percent year-on-year (7 percent quarter-on-quarter). The WGC said this is the strongest first quarter since 2019 for the segment, mainly driven by China's optimization of COVID-19 measures and the gold price performance.

According to the WGC, gold price neared record average highs for the quarter at $1,890 per ounce.

The council said that sustained and significant purchases by central banks across the world underscored gold's role in international reserve portfolios during times of market volatility and heightened risks.

Central banks helped boost demand by adding 228 tons to global reserves, also a first-quarter record high, the WGC said.

"Against the backdrop of turmoil in the banking sector, ongoing geopolitical tensions and a challenging economic environment, gold's role as a safe-haven asset has come to the fore. In this landscape, it is likely that investment demand will grow this year, especially with waning headwinds from the strong US dollar and interest rate hikes," said Louise Street, senior markets analyst at the WGC.

"Central bank buying is likely to remain strong and will be a cornerstone of demand throughout 2023 — even if at lower levels than the record highs seen last year," Street said.

According to the WGC, elevated geopolitical tensions worldwide and continued gold purchases from global central banks influenced many Chinese investors' physical gold investment decisions.

Looking ahead, China might see a stronger-than-usual demand for physical gold investment in the second quarter, which is a traditional off-season for gold demand in the country, according to the WGC, which attributed the strong demand to continued economic revival and consumers' increasing interest in safe-haven assets.