Nicolas Maduro, Venezuela's president, speaks as he touches a stack of 12 Kilogram gold ingots during a news conference on the country's cryptocurrency, known as the Petro, in Caracas, Venezuela, on Thursday, March 22, 2018. Carlos Becerra | Bloomberg via Getty Images

Gold is fast becoming indispensable to those clinging onto power in crisis-stricken Venezuela. Political tensions in the South American country are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere's worst humanitarian crisis in recent memory. Thousands of anti-government protesters took to the streets of the capital city over the weekend to demonstrate against President Nicolas Maduro.

The socialist leader is also facing an unprecedented challenge from opposition leader Juan Guaido. In recent weeks, a growing number of international governments have come out in support of Guaido, condemning Maduro for an election held late last year which was marred by an opposition boycott and vote-rigging. For a country known to have the largest proven oil reserves in the world, CNBC takes a look at some of the driving forces behind the growing importance of gold.

Why is gold so important?

Gold is of "absolute" importance to Maduro's administration, Diego Moya-Ocampos, principal political analyst for Latin America at IHS Markit, told CNBC via telephone on Monday. "It's important for three reasons: First, gold can act as fresh cash to help (Maduro's administration) survive. Second, it can help provide security or military protection." "And, third, it can help them to live, hide and maybe even prepare a comeback," Moya-Ocampos said.

Juan Guaido, President of Venezuela's National Assembly, reacts during a rally against Venezuelan President Nicolas Maduro's government and to commemorate the 61st anniversary of the end of the dictatorship of Marcos Perez Jimenez in Caracas, Venezuela January 23, 2019. Carlos Garcia Rawlins | Reuters

Countries typically only tend to sell large volumes of gold reserves in the most extreme financial circumstances. And, hyperinflation, mounting U.S. sanctions and collapsing oil production prompted Maduro to start selling off gold about a year ago. Two-thirds of Venezuela's foreign exchange reserves at the central bank is thought to be held in gold, Moya-Ocampos said, with Maduro increasingly determined to free up more cash.

What's happened lately?

On Friday, Abu Dhabi investment firm Noor Capital said it had bought 3 metric tons of gold from Venezuela's central bank. That prompted U.S. Senator Marco Rubio, a Republican from Florida, to criticize the United Arab Emirates-based company. He warned any firm seen doing such business would be subject to the sanctions that President Donald Trump's administration had been stepping up in recent weeks.

Noor Capital has since said it would refrain from further transactions with Venezuela. More recently, the BBC reported on Saturday, citing an unidentified source, that Turkey was also facing renewed pressure to stop buying gold from Venezuela. Turkey is one of the few countries, alongside China and Russia, to have publicly come out in support of Venezuela's Maduro.

Does Venezuela hold gold reserves overseas?

Yes. Some of Venezuela's gold reserves is held by the Bank of England. Guaido has claimed government officials loyal to Maduro want to sell off the country's foreign gold reserves in the U.K. to relocate the profits to the central bank of Venezuela. In a letter addressed to British Prime Minister Theresa May and Bank of England Governor Mark Carney, Guaido said: "I am writing to ask you to stop this illegitimate transaction."

Mark Carney, governor of the Bank of England (BOE). Chris Ratcliffe | Bloomberg | Getty Images

"If the money is transferred... It will be used by the illegitimate and kleptocratic regime of Nicolas Maduro to repress and brutalize the Venezuelan people," he added, as reported by Reuters. At the start of 2018, Venezuela's central bank reportedly held 150 tons of gold but by November, holdings had fallen to 132 tons — a 75-year low.

How has the international community responded?

Presently, more than 20 countries have backed Guaido as Venezuela's legitimate president. On Monday, European countries including Britain, Spain, France, Germany, Sweden and Denmark all joined the growing list of those in favour of Venezuela's opposition leader, after a deadline for Maduro to hold fresh elections expired. However, in addition to the critical support of Venezuela's military elite, Maduro has maintained the support of countries including: China, Russia and Turkey. "China has been very pragmatic. It's support for Maduro is limited and conditional," IHS' Moya-Ocampos said. "Russia will also be very careful. It sees Venezuela as an area to pressure the U.S. — but beyond public statements, we are not going to see support in terms of cash and military actions (from Moscow or Beijing)," he added.

What's going on in Venezuela?