The gold market is seeing a major shift, with central bank buying slowing down and a rise in demand for gold-backed exchange-traded funds (ETFs) and gold-backed cryptocurrencies. Recently, the minting of these tokens surged to a three-year high, signaling a growing trend toward digital gold investments.

According to rwa.xyz, over $80 million worth of gold-backed tokens were minted in the last month alone. This increase in activity has helped propel the sector’s market capitalization up by 6%, bringing it to $1.43 billion. Additionally, the monthly transaction volume saw a substantial rise of 77%, reaching $1.27 billion, reflecting a renewed interest in digital assets tied to the precious metal.

The rise in digital gold activity reflects a broader trend in the gold market. The World Gold Council reports that global gold demand in the first quarter of 2025 reached 1,206 tonnes, representing a 1% year-over-year increase and the highest first-quarter demand since 2016. However, central bank purchases slowed to 244 tonnes, down significantly from the previous quarter’s 365 tonnes.

Gold-backed ETFs have seen substantial growth, with investment demand more than doubling to 552 tonnes. This shift suggests that investors are increasingly turning to gold as a store of value, similar to central banks, whose reduced demand for the metal has pushed others to fill the gap.

As a result of this activity, the average gold price for the quarter reached a record $2,860 per ounce, up 38% from last year. However, gold prices dipped by 2.35% recently, despite a strong 23.5% increase year-to-date. Spot gold is currently priced at $3,240.

While traditional gold demand, such as jewelry, decreased to pandemic-era lows, there was still strong demand for gold bars and coins, particularly in China, where individuals continue to seek gold as a hedge against economic volatility.