Tether's Gold Surge Blurs Sovereign and Private Market Power

Tether's gold reserves have surged to 116 tons, placing the stablecoin issuer among the world's largest non-central bank holders of bullion, according to a report by Jefferies. The firm now holds 12 tons to back its XAUt token and 104 tons to support its USDT stablecoin, making it the largest non-sovereign entity in the gold market. The accumulation, which reached 26 tons in the third quarter alone, accounts for roughly 2% of global demand, tightening supply and fueling a gold price rally that has pushed the metal to record highs.

The report highlights Tether's strategic pivot toward gold, driven by CEO Paolo Ardoino's public advocacy for the asset and the firm's growing profits. Analysts led by Andrew Moss at Jefferies estimate that Tether's gold holdings could increase further as USDT expands and gold maintains its 7% allocation in reserves. With projected 2025 profits exceeding $15 billion, even half of that amount reinvested in bullion could add nearly 60 tons annually.

Tether's influence extends beyond direct purchases. The company has invested over $300 million in gold royalty and streaming firms this year, including the recent acquisition of Versamet shares from Royal Gold. This move aligns with a broader strategy to integrate deeper into the gold ecosystem, as evidenced by the hiring of top HSBC metals traders to bolster its operations.

The surge in private-sector demand contrasts with mixed trends among central banks. According to Goldman Sachs, China added 15 tons of gold to its reserves in September, reversing a summer lull and contributing to a three-year bull market. Conversely, India's gold reserves dipped by $1.95 billion in November, part of a broader $2.7 billion decline in its foreign exchange reserves. These divergent paths underscore the growing role of non-traditional actors in shaping gold markets.

Gold prices have risen more than 50% in 2025, reaching $4,080 per ounce, as central banks and private investors alike seek to hedge against geopolitical and financial risks. Jefferies attributes much of the recent volatility to Tether's buying spree, which has outpaced traditional demand drivers. The firm estimates that Tether's purchases could continue to tighten supply, further supporting prices even as central bank flows remain stable.

The implications for the broader market are significant. Tether's gold-backed stablecoins, particularly XAUt, have gained traction, with a market capitalization of $1.5 billion. However, the firm's planned launch of the GENIUS Act-compliant USAT stablecoin— which does not require gold reserves—introduces uncertainty about the long-term trajectory of its bullion purchases.

As Tether's gold holdings rival those of smaller central banks, the line between sovereign and private-sector influence in the gold market continues to blur. With central banks prioritizing diversification and Tether leveraging its financial clout, the interplay between these forces will likely shape gold's role in the global economy for years to come.