TLDR
- Tokenized gold market reached a record high of $2.88 billion as spot gold prices surged past $3,800 per ounce
- Tether Gold (XAUT) and PAX Gold (PAXG) both posted record monthly trading volumes exceeding $3.2 billion in September
- PAXG attracted over $40 million in net inflows during September
- Gold has rallied nearly 47% year-to-date, outperforming Bitcoin’s 22% return
- Market growth driven by Fed rate cut expectations, inflation concerns, and U.S. government shutdown fears
The tokenized gold market has reached a historic milestone, approaching the $3 billion mark as physical gold prices continue their impressive rally. The market capitalization of gold-backed tokens climbed to an all-time high of $2.88 billion, according to CoinGecko data, reflecting growing investor interest in digital assets backed by the precious metal.
Spot gold prices have been on a tear, breaking through $3,800 per ounce to set fresh records. This represents an astonishing gain of nearly 47% year-to-date, making it one of the best-performing assets of 2025.
The two largest gold-backed tokens, Tether Gold (XAUT) and PAX Gold (PAXG), have been the primary beneficiaries of this gold rush. XAUT’s market capitalization has reached approximately $1.43 billion, while PAXG stands at around $1.12 billion – both at their respective all-time highs.
Trading activity for these tokens has also surged. PAXG recorded over $3.2 billion in monthly trading volume during September, setting a new record. The token also attracted more than $40 million in net inflows during the same period.
Similarly, XAUT posted a record $3.25 billion in monthly volume, according to DeFiLlama data. Interestingly, XAUT’s market cap growth came solely from the appreciation of the underlying metal, as no new token minting occurred in September following August’s $437 million increase.
What’s Driving the Gold Rally?
Several factors have contributed to gold’s impressive performance. Investors are increasingly betting on more Federal Reserve rate cuts, which typically boosts non-yielding assets like gold. Persistent inflation pressures have also enhanced gold’s appeal as a traditional hedge.
Political uncertainty has added fuel to the fire, with anxiety building over a possible U.S. government shutdown. These combined factors have created an ideal environment for gold to thrive.
Meanwhile, Bitcoin (BTC), often referred to as “digital gold,” has underperformed physical gold with a 22% year-to-date return compared to gold’s 47% gain.
The Growing Appeal of Tokenized Gold
Tokenized versions of gold offer unique advantages over traditional bullion ownership. These digital assets are backed by physical reserves but settle on blockchain rails, enabling round-the-clock trading and near-instant transfers.
This accessibility has made tokenized gold an attractive option for investors seeking exposure to the precious metal without the logistics of physical storage. The 24/7 trading capability also allows investors to respond quickly to market movements, unlike traditional gold markets with limited trading hours.
The growth in the tokenized gold market reflects a broader trend of traditional assets moving onto blockchain technology. As these tokens continue to gain traction, they create an important supplementary channel for gold investment alongside conventional methods.
Looking ahead, market observers suggest the tokenized gold sector could continue its expansion as macroeconomic conditions remain supportive for the yellow metal. With ongoing economic uncertainties, gold’s traditional role as a safe haven asset is likely to maintain its appeal among investors seeking stability.
The current record-breaking performance of gold-backed tokens underscores their growing importance in the digital asset ecosystem, bridging traditional finance with blockchain technology in a tangible and value-backed manner.
Gold prices closed at $3,817.34 for XAUT and $3,824.70 for PAXG on September 29, reflecting slight variations due to the different backing mechanisms and market dynamics of each token.
