Tokenized Gold Market Nears $3B as Bullion Blasts to Fresh Record Highs

Gold’s historic rally accelerated on Monday, with spot prices punching through $3,800 per ounce to set fresh all-time record, extending a torrid year in which bullion is up roughly almost 47% year-to-date.

That surge is echoing on across crypto rails, with gold-backed tokens climbing to an all-time high market capitalization of $2.88 billion, CoinGecko data shows. Tokenized versions of the metal are backed by physical reserves but settle on blockchain rails, offering round-the-clock trading and near-instant transfers.

Tether Gold (XAUT) and Paxos' PAX Gold (PAXG), both tokens issued by firms predominantly known for their stablecoins, are dominating the category. XAUT’s capitalization stood near $1.43 billion and PAXG’s at roughly $1.12 billion, both at their respective all-time highs.

Liquidity has swelled alongside the rally, too. PAXG attracted more than $40 million in net inflows during September and set a fresh trading volume record surpassing $3.2 billion in monthly turnover.

XAUT also posted a record $3.25 billion in monthly volume, per DeFiLlama. Meanwhile, the token's market cap growth came solely from the underlying metal's appreciation, as no new token minting happened this month after August's $437 million jump.

The tokenized gold market could continue gaining as macro conditions remain supportive for the yellow metal. Investors expectations mount for more Federal Reserve rate cuts and a softer U.S. dollar, while anxiety builds over a possible government shutdown in the U.S. Meanwhile, bitcoin (BTC), often dubbed as "digital gold," is lagging behind gold with a 22% year-to-date return.

Read more: Bitcoin to Join Gold on Central Bank Reserve Balance Sheets by 2030: Deutsche Bank