Gold’s historic rally accelerated on Monday, with spot prices punching through $3,800 per ounce to establish a fresh all-time record. This extends a scorching year for the yellow metal, which is now up roughly 47% year-to-date. The surge is echoing across crypto rails, propelling the market capitalization of gold-backed tokens to an all-time high of $2.88 billion, according to CoinGecko data. These tokenized versions of the metal are backed by physical reserves but settle on blockchain rails, offering round-the-clock trading and near-instant transfers.
Two dominant tokens in the category, Tether Gold (XAUT) and Paxos’ PAXG, both issued by firms known for their stablecoins, are leading the charge. XAUT’s capitalization stood near $1.43 billion and PAXG’s at approximately $1.12 billion, with both hitting record highs. Liquidity has swelled alongside the rally; PAXG attracted over $40 million in net inflows during September and set a fresh monthly trading volume record, surpassing $3.2 billion in turnover. XAUT also posted a record $3.25 billion in monthly volume, per DeFiLlama. Notably, XAUT’s market cap growth this month stemmed solely from the underlying metal’s appreciation, as no new tokens were minted following a significant jump in August.
The tokenized gold market could continue to gain ground as macro conditions remain supportive for the yellow metal. Investor expectations are mounting for more Federal Reserve rate cuts and a softer U.S. dollar, while anxiety builds over a possible U.S. government shutdown. This performance sharply contrasts with Bitcoin (BTC), often dubbed “digital gold,” which is lagging with a 22% year-to-date return.
