Gold-Backed Cryptocurrencies Thrive Amid Record ETF Inflows
The price of gold has surged nearly 11% year-to-date in 2025 and 43% over the past 12 months, trading at $2,910 per ounce. This rally has propelled gold-backed cryptocurrencies like PAXG (Paxos Gold) and XAUT (Tether Gold) to outperform the broader crypto market.
Key Drivers of Gold’s Rally
- ETF Inflows: Physically-backed gold ETFs recorded their largest weekly inflow since March 2022, adding 52.4 tons (~$4.9 billion) last week, primarily from North American investors (World Gold Council).
- Geopolitical Uncertainty: Rising tensions and economic policies (e.g., potential tariffs) have boosted gold’s safe-haven appeal.
- Supply Constraints: Q4 2024 mining production dipped by 2 tons, while recycling and hedging barely offset demand.
Gold-Backed Crypto Performance
- PAXG and XAUT have significantly outpaced the CoinDesk 20 Index (+26% YoY), as they’re pegged to gold’s spot price.
- Tokenized Gold Demand: Over $25 million in commodity-backed tokens were minted in February 2025—the highest volume since December 2022 (RWA.xyz).
FAQs
1. Why are gold-backed cryptos like PAXG gaining traction?
They combine gold’s stability with blockchain’s liquidity, appealing to investors hedging against market volatility.
2. How do PAXG and XAUT maintain price parity with gold?
Each token is 100% backed by physical gold reserves, audited regularly for transparency.
3. What risks should investors consider?
Smart contract vulnerabilities and custodial risks (e.g., reserve mismanagement) could impact token value.
👉 Discover how to diversify with gold-backed crypto
Gold remains a cornerstone of conservative portfolios, and its tokenized variants offer modern investors a bridge between traditional and digital assets.
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