Tether Gold Market Cap Tops $3.3B as XAUt Demand Rises

Tether Gold’s XAUt token reached a $3.3 billion market capitalization in the first quarter, a 36% increase. At quarter-end, 707,741 XAUt tokens were in circulation, with each token backed by one troy ounce of physical gold held in reserve.

Tether reported reserves expanded during the quarter as investors sought hard assets amid geopolitical tensions related to Iran and shifting expectations for U.S. interest rates. The company reported XAUt grew by roughly $1.1 billion since Jan. 1 and that the token accounted for more than half of the tokenized gold market by value.

Gold markets were volatile over the quarter. Prices climbed early on safe-haven flows and bets that the Federal Reserve would cut rates, then pulled back when near-term rate-cut expectations faded and the U.S. dollar strengthened. Tether reported XAUt’s U.S. dollar price was up 4.37% year to date and that gold traded around $4,500 per troy ounce at the time of its update; the report noted prices had briefly peaked above $5,500 per troy ounce during the earlier rally.

Each XAUt token represents one troy ounce of gold held in reserve. Token holders can transfer and trade XAUt around the clock and across borders without handling physical storage and logistics, a difference from traditional vault-based ownership.

PAX Gold (PAXG) from Paxos is the closest competitor, with a market capitalization near $2.2 billion and supervision by the New York State Department of Financial Services. Together XAUt and PAXG make up the bulk of the tokenized gold sector, which sits within a wider market for tokenized real-world assets valued at about $31 billion by industry data.

Tether attributed the increase in XAUt supply to new issuance tied to physical gold reserves and to rising investor demand for digital exposure to bullion during the quarter.