Tether Gold dominates as onchain gold trading activity rises with demand

Tether Gold surpassed $4 billion in value, accounting for more than half of the total supply of the gold-backed stablecoin market. 

The surpassing of $4 billion in value occurred amid growing demand for real-world asset tokenization amid persistent macroeconomic instability and record gold prices.

In 2025, the market capitalization of gold-backed stablecoins increased dramatically, from over $1.3 billion to over $4 billion. Of this, XAU₮ accounted for around 60% of the supply of gold-backed stablecoins in this market, dominating both issuance and circulation. 

This was driven by geopolitical fragmentation, all-time-high gold prices, and growing institutional and digital-native demand for fully on-chain safe-haven assets.

In the same year, spot gold prices topped US$5,000 per ounce, indicating the growing global interest in and demand for real gold. Simultaneously, there was an inflow of funds into exchange-traded funds (ETFs). Gold ETF holdings rose by 397 tonnes in the first half of the year and hit a record 3,932 tonnes by November of last year.

XAU₮ backing confirms Tether’s gold fund expansion

XAU₮ issuer reported that a stablecoin issuer recognized under El Salvador’s Digital Asset Issuance Law held 520,089.350 fine troy ounces of physical gold. The gold-backed 520,089.300000 XAU₮ tokens in circulation on a 1:1 basis at the end of quarter four of 2025. The overall market capitalization of XAU₮ tokens was $2.25 billion, with 409,217.640000 XAU₮ tokens sold and 110,871.660000 XAU₮ available for sale.

Following these end-of-year metrics, Tether Gold Investments increased its fund exposure by over 27 metric tons of gold in the fourth quarter of 2025 alone. It surpassed the acquisitions made by the majority of individual central banks during the same time frame.

“Through Tether Gold, we are operating at a scale that now places the Tether Gold Investment Fund alongside sovereign gold holders, and that carries real responsibility. XAU₮ exists to remove ambiguity at a time when confidence in monetary systems is weakening, and it is being put through a pressure test by both institutions and people.”

Paolo Ardoino, CEO of Tether.

Ardoino also said the market’s growth indicates that investors now expect tokenized assets to meet standards comparable to those of national and institutional reserves. He added that each token is backed by physical, vaulted gold and can be verified on-chain

Stablecoins and gold market trends drive institutional investor activity

Recent on-chain activity shows the rising use of stablecoins to access gold-backed tokens.  On January 23, a blockchain analytics platform, Lookonchain, revealed that a trader by the username 0x0a5e purchased 843 Tether Gold tokens, valued at roughly $4.17 million, after submitting over $7 million in USDT to the Bybit exchange. This effectively converted stablecoins into tokenized gold.

This growing demand and tokenized gold coincide with a broader surge in gold prices. In 2025, gold prices rose sharply, marking one of the metal’s best yearly results in decades.

The rise in gold prices persisted this year, with the metal hitting an all-time high of $4,966 per ounce on Friday due to increased macroeconomic volatility and strong demand from institutional investors. Central bank accumulation further reinforced this rally, reinforcing the upward momentum in global gold markets. 

According to the World Gold Council’s 2025 Central Bank Gold Reserves Survey, 95% of surveyed central banks said they expect global gold reserves to either increase or stay the same over the course of the next 12 months.

In the near term, market analysts also project a further rise in gold prices. In September of last year, Goldman Sachs projected the price of gold to increase by roughly 6% by the middle of 2026 due to ongoing demand from financial institutions. The firm also revealed that gold increased by more than 40% in 2025 and is on track for its third straight “year of double-digit gains.”

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