Institutional Shift to Tokenized Gold Propels XAUt's $1.5B Surge

Tether Gold (XAUt) has achieved a significant milestone, surpassing a $1.5 billion market capitalization as of October 2025, driven by a historic rally in gold prices and growing institutional adoption of tokenized real-world assets (RWAs). This marks XAUt as the second-largest tokenized gold product, following Paxos Gold (PAXG), which reached the same threshold earlier in 2025. The surge in XAUt's value reflects a broader shift in investor preferences toward blockchain-based exposure to physical gold, with the token's net asset value (NAV) now standing at $3,862 per ounce, up 8.51% from the previous month Tether Gold (XAUt) Surpasses $1 Billion Market Cap as Gold Price Rises^[1].

The growth of XAUt is closely tied to the performance of the gold market, which has seen prices climb to over $3,800 per ounce, a 19.90% increase over 30 days Tether Gold (XAUt) Surpasses $1 Billion Market Cap as Gold Price Rises^[1]. Each XAUt token is backed by one fine troy ounce of gold stored in Swiss vaults, ensuring a direct alignment with the metal's price movements. This structure has attracted both institutional and retail investors seeking to hedge against macroeconomic uncertainties, such as inflation and geopolitical tensions. By September 2025, the combined trading volumes of XAUt and PAXG had exceeded $3.2 billion, underscoring the maturation of the tokenized gold market Tether Gold (XAUt) Surpasses $1 Billion Market Cap as Gold Price Rises^[1].

The competitive landscape between XAUt and PAXG highlights diverging strategies in regulatory compliance and user adoption. While PAXG, regulated by the New York Department of Financial Services (NYDFS), offers monthly audited reserve reports and a larger retail user base (74,000 holders), XAUt operates under a Tether subsidiary licensed in El Salvador, with quarterly reserve attestations by BDO Italia Tether Gold (XAUt) Hits $1B Market Cap Amid Record High Gold Prices^[2]. XAUt's multi-chain flexibility-available on Ethereum, Tron, TON, Arbitrum, and Polygon-positions it as a more decentralized alternative, though its daily trading volume ($23 million) remains lower than PAXG's ($67 million). This suggests that XAUt may cater more to crypto-native and institutional investors, while PAXG retains a stronger presence among retail users Tether Gold (XAUt) Hits $1B Market Cap Amid Record High Gold Prices^[2].

Tether's broader strategy in the tokenized asset space includes expanding its infrastructure and regulatory footprint. In September 2025, the company launched a U.S.-regulated stablecoin, USAT, compliant with the Genius Act, and integrated it with platforms like Rumble to broaden user access Tether Gold (XAUt) Surpasses $1 Billion Market Cap as Gold Price Rises^[1]. Additionally, Tether has announced plans for a $500 billion capital raise, aiming to sell a 3% stake through a private placement to fund its expansion into tokenized gold and other RWAs Tether Gold (XAUt) Surpasses $1 Billion Market Cap as Gold Price Rises^[1]. These moves indicate Tether's intent to solidify its position in the RWAs market, which reached $26 billion in mid-2025, with XAUt ranking among the top protocols .

The tokenized gold market's expansion is further supported by partnerships enhancing XAUt's utility. In August 2025, Tether partnered with Chainlink to integrate real-time equity and ETF data into DeFi ecosystems, boosting XAUt's applicability in structured products like gold-backed loans . This collaboration aligns with the growing demand for institutional-grade data in DeFi, reducing manipulation risks and increasing trust in tokenized assets. Meanwhile, XAUt's integration with Telegram's TON network in June 2025 expanded its reach to 900 million users, positioning it as a bridge between mass-market adoption and institutional-grade assets .

Despite its growth, XAUt faces challenges, including regulatory scrutiny and competition from traditional gold ETFs. While its physical gold reserves have grown to 7.66 tons as of Q2 2025, concerns remain about centralization risks (Swiss vaults controlled by Tether subsidiaries) and storage fees . Additionally, the token's ability to maintain a 1:1 peg during periods of gold price volatility will be a critical test of its resilience. Analysts note that XAUt's success will depend on its capacity to balance innovation with transparency, particularly as the RWA market continues to evolve Tether Gold (XAUt) Hits $1B Market Cap Amid Record High Gold Prices^[2].