Tokenized Gold's $2.9B Surge Driven by Inflation Hedges and Central Bank Demand

The tokenized gold market has surged to an estimated $2.9 billion in September 2025, driven by record trading volumes in gold-backed tokens and a historic rally in physical gold prices. Spot gold prices pierced $3,800 per ounce, marking an all-time high and extending a 47% year-to-date gain. This growth reflects heightened demand for safe-haven assets amid inflationary pressures, Federal Reserve rate-cut expectations, and geopolitical uncertainties, including the risk of a U.S. government shutdown. Tokenized gold, which combines blockchain technology with physical bullion, now accounts for nearly 90% of the digital gold market, with Tether’s XAUT and Paxos’ PAXG dominating the spaceTokenized Gold Market Nears $3B as Bullion Blasts to Fresh Record Highs^[1].

Tether Gold (XAUT) and Paxos Gold (PAXG) each reported record monthly trading volumes exceeding $3.2 billion in September, with PAXG also attracting $40 million in net inflows. XAUT’s market capitalization reached $1.43 billion, while PAXG hit $1.12 billion, both nearing their all-time highs. The liquidity surge was fueled by increased investor interest in round-the-clock trading and near-instant transfers, features unique to tokenized assets. Unlike traditional gold ETFs, these tokens are backed by audited physical reserves and settle on blockchain networks, offering transparency and accessibilityTokenized Gold Market Nears $3B as Bullion Blasts to Fresh Record Highs^[1].

The rally in tokenized gold mirrors the broader bullion market’s performance, which is being propelled by macroeconomic factors. Investors are positioning for potential Fed rate cuts and a weaker U.S. dollar, which traditionally boosts gold’s appeal. Central banks, particularly in Asia and the Middle East, have also intensified gold purchases, adding 1,086 tons to global reserves in 2024. This trend underscores gold’s role as a hedge against currency devaluation and geopolitical instability. Meanwhile, Bitcoin, often dubbed “digital gold,” has lagged, with a 22% year-to-date return compared to gold’s 47% gainTokenized Gold Market Nears $3B as Bullion Blasts to Fresh Record Highs^[1].

Analysts highlight the structural advantages of tokenized gold over traditional forms. Fractional ownership, enabled by blockchain, allows investors to buy as little as 0.000001 XAUT, democratizing access to a $20 trillion asset class. Smart contracts and self-custodial options further enhance liquidity and reduce reliance on intermediaries. However, challenges persist, including regulatory uncertainty and high blockchain transaction costs. Despite these hurdles, tokenized gold’s market cap is projected to grow as institutional adoption accelerates, with platforms like JPMorgan’s Onyx testing gold-backed tokens for settlement and collateral purposesHow Tokenized Gold is Transforming the Appeal of Precious Metals^[3].

Looking ahead, the tokenized gold market is poised for further expansion. Goldman Sachs analysts forecast gold prices to reach $4,000 per ounce by mid-2026, while tokenized assets could grow to $16 trillion by 2030. This trajectory hinges on continued central bank demand, geopolitical volatility, and the integration of tokenized gold into decentralized finance (DeFi) ecosystems. For now, XAUT and PAXG remain the primary vehicles for digital gold, offering investors a blend of stability and innovation in an increasingly digitized financial landscapeTokenized Gold Explained: PAXG, XAUT, and the 2025 Surge^[4].