The market for tokenized gold is expanding in parallel with rising demand for physical bullion, underscoring a broader shift toward traditional safe-haven assets as geopolitical tensions and trade uncertainty push investors away from the US dollar.

On Monday, Tether said its Tether Gold (XAUt) product now accounts for more than half of the global market for gold-backed stablecoins, with a total value exceeding $2.2 billion.

Tether reported that 520,089 XAUt tokens were in circulation at the end of the fourth quarter, with each token backed on a one-for-one basis by physical gold held in reserve. CEO Paolo Ardoino said the investment vehicle holding the bullion that underpins XAUt has grown to a scale comparable with that of some sovereign gold holders.

The update came as Comex gold futures moved above $5,000 per troy ounce for the first time, extending a year-to-date gain of roughly 17%.

Central banks accelerate gold accumulation as dollar weakens

Gold’s rally has been building over several years, driven largely by central banks reducing their dependence on the US dollar and rebuilding bullion reserves as protection against currency risk, rising geopolitical tensions and, to a lesser extent, sanctions exposure. According to the World Gold Council, central banks accelerated their purchases in the second half of 2025, adding a net 220 tonnes of gold in the third quarter alone.

These buying flows reflect a broader effort by reserve managers to diversify away from dollar-denominated assets and toward stores of value that sit outside the traditional financial system. The trend has coincided with a sustained decline in the US dollar since President Donald Trump took office in early 2025. The US Dollar Index fell 9.4% last year, its weakest annual performance since 2017, and has continued to slide this month, reaching its lowest level since September. Since Jan. 19, the index has dropped a further 2.4%, according to Bloomberg data.

Some market observers suggest the move may have further to run. Otavio Costa of Azuria Capital said the dollar has broken below a long-term support trend line for the first time in more than a decade, with potential confirmation on a monthly basis. “The debasement trade is now well understood,” Costa wrote, adding that “the next phase is a broad weakening of the US dollar relative to other fiat currencies.”

Bitcoin lags gold as debasement hedge

Bitcoin has yet to meaningfully assume the role that gold plays in this environment. Although often framed as a hedge against currency debasement, Bitcoin has not attracted the same consistent, long-term inflows, particularly from older or more conservative investors.

An analysis by investment strategist Karel Mercx of Dutch financial advisory and investment publication Beleggers Belangen concluded that Bitcoin has so far fallen short of expectations as a debasement trade, leaving gold as the preferred hedge in periods of monetary and geopolitical uncertainty.

Sources:

https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q3-2025/central-banks

https://cointelegraph.com/news/gold-digital-rally-mirrors-rising-stress-dollar

https://x.com/TaviCosta/status/2015816716069319082

https://coinmarketcap.com/currencies/tether-gold/

https://www.bloomberg.com/quote/DXY:CUR