As demand for traditional gold surges, cryptocurrency investors are increasingly turning to gold-backed digital assets like Paxos Gold (PAXG) and Tether Gold (XAUT), drawn by their combination of gold’s value and the flexibility of blockchain technology.
Year-to-date, PAXG and XAUT have risen 24.15% and 23.7%, respectively, reaching new all-time highs above $3,300, aligning closely with the performance of spot gold. However, their prices have slightly pulled back to $3,265 and $3,244, respectively.
While these gold-backed cryptocurrencies have thrived, the broader cryptocurrency market has struggled. Bitcoin (BTC) has lost over 11% of its value this year, and the wider crypto market, as measured by the CoinDesk 20 (CD20) index, has fallen by more than 30%.
The rise of gold-backed tokens reflects a growing trend among investors seeking stability in uncertain times, particularly amid escalating U.S.-China trade tensions. Inflows into gold ETFs hit 226.5 tonnes in Q1 2025, the highest level since early 2022, with nearly 60% of the demand originating from North America, according to data from the World Gold Council.
Simultaneously, gold-backed cryptocurrencies saw over $42.7 million in net token minting during the first quarter, pushing their total market capitalization close to $1.4 billion. This growth has helped bolster the price of gold and fuel interest in digital gold assets.
