Tether Gold (XAUt) has experienced a surge in adoption as global gold prices hit record levels, driven by heightened demand from central banks and institutional investors seeking safe-haven assets amid macroeconomic uncertainty. The tokenized gold product, which represents one troy ounce of physical bullion stored in custodial vaults, saw its market capitalization exceed $800 million by mid-2025, backed by 7.66 tons of fine troy ounces of gold, according to an attestation report verified by BDO Italia [1]. This growth aligns with broader trends in the bullion market, where central banks and exchange-traded funds (ETFs) are accelerating gold accumulation to hedge against inflation and geopolitical risks.

Central banks have been a key driver of the gold rally, adding over 1,000 metric tons of bullion in 2024, the third consecutive year surpassing that threshold. The World Gold Council (WGC) noted that most central bankers anticipate further increases in bullion reserves over the next 12 months. This marks a reversal from decades of net sales, as highlighted by WisdomTree’s Christopher Gannatti, who described the shift as “not normal” but attributed it to rising geopolitical tensions and the “weaponization” of currencies [1]. The trend has extended into 2025, with gold ETFs recording $38 billion in inflows during the first half of the year, boosting physical holdings by 397.1 metric tons [2].

XAUt’s price has closely mirrored physical gold, which traded near $3,400 per troy ounce by mid-2025. Over the past 12 months, the token’s value rose 40%, aligning with the performance of spot gold [1]. Tether’s expansion of XAUt to new markets, including Thailand via Maxbit, and its omnichain integration on The Open Network (TON) through USDT0, further reflect growing institutional interest in tokenized commodities. Analysts argue that XAUt’s appeal lies in its ability to combine gold’s historical role as a store of value with blockchain features like divisibility, portability, and redeemability, making it a liquid alternative to physical bullion [1].

The bullion boom is underpinned by persistent inflationary pressures and uncertainty around monetary policy. U.S. inflation has resurfaced as tariffs and trade tensions, particularly linked to Donald Trump’s re-election prospects, fuel fears of economic instability. Economist Peter Schiff highlighted that inflation risks remain a key driver of gold demand, with the Federal Reserve forecasting higher prices in the second half of 2025 [1]. Meanwhile, Morningstar’s Preston Caldwell noted delayed expectations of rate cuts due to these inflationary trends, reinforcing gold’s role as a hedge.

Tether Gold’s growth underscores the convergence of traditional and digital finance. Unlike fiat-pegged stablecoins, XAUt’s physical backing offers a transparent, tokenized representation of gold, appealing to investors seeking diversification without the logistical challenges of physical storage. This aligns with broader industry trends as financial institutions explore blockchain solutions to enhance liquidity and accessibility. The product’s success suggests that tokenized commodities could become a staple in institutional portfolios, particularly as markets continue to navigate macroeconomic volatility [3].

Sources:

[1] Cointelegraph, Tether Gold (XAUt) Market Cap Surges Amid Gold Rally, July 2, 2025, https://cointelegraph.com/news/tether-gold-xaut-market-cap-gold-rally-2025

[2] ADVFN, Gold ETF Inflows Fuel Record Prices Amid Geopolitical Tensions, July 10, 2025, https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96502645/bitcoin-nears-120k-as-analysis-predicts-039-lar

[3] CoinGecko, Tether Gold Gains Momentum as Gold Hits Record Highs, July 25, 2025, https://www.coingecko.com/en/coins/tether/eur