TLDR
- PAXG and XAUT gold-backed cryptocurrencies rose over 23% year-to-date, outperforming the wider crypto market
- Gold ETF inflows hit a three-year high in Q1 2025, with 226.5 tonnes flowing in
- Bitcoin has lost more than 11% of its value so far this year while the broader crypto market fell by about 30%
- Gold ETFs recently surpassed Bitcoin ETFs in assets under management
- Jeffrey Gundlach predicts gold could reach $4,000, citing increased central bank holdings
As traditional gold markets experience a robust rally in early 2025, crypto investors are increasingly turning to tokenized versions of the precious metal. Gold-backed cryptocurrencies like Paxos Gold (PAXG) and Tether Gold (XAUT) have risen 24.15% and 23.7% respectively year-to-date, reaching new all-time highs above $3,300 before settling at $3,265 and $3,244.
This performance stands in stark contrast to the broader cryptocurrency market. Bitcoin (BTC) has dropped more than 11% of its value so far this year, while the wider crypto market has fallen by over 30%, based on the CoinDesk 20 index.
The surge in tokenized gold comes as investors seek refuge from market uncertainty caused by escalating U.S.-China trade tensions. These tokens, which are backed by physical gold and track its price, offer crypto investors exposure to real-world assets with blockchain-based liquidity.
Gold ETFs Experiencing Major Comeback
The movement toward gold extends beyond the crypto space. Inflows into gold ETFs reached 226.5 tonnes in the first quarter of 2025, marking the highest level since early 2022, according to World Gold Council data. Nearly 60% of that demand originated from North America.
Similarly, gold-backed cryptocurrencies saw net token minting of over $42.7 million in Q1 2025, based on data from RWA.xyz. This minting activity, combined with gold’s price appreciation, has pushed their total market capitalization to nearly $1.4 billion.
In a major market shift, gold ETFs recently surpassed Bitcoin ETFs in assets under management. This development highlights growing investor preference for the traditional safe-haven asset over digital alternatives during uncertain economic times.
Expert Predictions Point Higher
Gold’s impressive run, having breached the $3,000 mark for the first time last week, has prompted optimistic forecasts from market experts. Jeffrey Gundlach, CEO of DoubleLine Capital and known as the ‘Bond King,’ believes the rally has room to run.
“I think gold will make it to $4,000. I’m not sure that’ll happen this year, but I feel like that’s the measured move anticipated by the long consolidation at around $1,800 on gold,” Gundlach stated during a macroeconomic outlook presentation.
His bullish prediction stems from changing strategies among global central banks. According to IMF data presented by Gundlach, central banks have been increasing their gold reserves.
The total amount of gold held globally has climbed from around 34 billion Special Drawing Rights (SDR) in 2010 to 40.9 billion SDR. This level matches that seen between 1975 and 1980, highlighting renewed interest in gold as a reserve asset.
Special Drawing Rights are an international reserve asset created by the IMF in 1969, defined through a basket of currencies. The rising SDR value of gold holdings indicates a fundamental shift in how central banks view the metal’s importance.
Gold’s resurgence as a safe-haven asset appears to be driving interest in both traditional investment vehicles and their blockchain-based counterparts. For crypto investors seeking stability in a volatile market, gold-backed tokens offer a compelling combination of traditional value and digital flexibility.
The current market dynamics reflect a broader pattern of investors reassessing risk in their portfolios. With traditional cryptocurrencies experiencing downward pressure, the flight to gold-backed alternatives suggests a more cautious approach among digital asset holders.
This trend may continue as long as macroeconomic uncertainties persist. The escalating trade tensions between major economies and shifting central bank policies create an environment where safe-haven assets typically thrive.
For the tokenized gold market, this represents an opportunity for continued growth. As more investors seek exposure to gold’s stability while maintaining the benefits of blockchain technology, tokens like PAXG and XAUT are well-positioned to attract additional capital.
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