Gold-Pegged Cryptos Shine as Precious Metal Hits Record Amid Economic Jitters

Gold-backed cryptocurrencies are rallying alongside physical gold, which has surged nearly 10% this year to an all-time high of $2,880 per ounce. Mounting concerns over trade war tensions and economic uncertainty have driven investors toward safe-haven assets, boosting demand for both gold and its digital counterparts.

Leading tokenized gold assets, such as PAX Gold (PAXG) and Tether Gold (XAUT), have mirrored gold’s price movement, climbing roughly 10% year-to-date. Each of these tokens represents ownership of one troy ounce of physical gold stored in secure vaults, offering investors a blockchain-based way to gain exposure to the precious metal.

The rally has also extended to gold mining stocks, with the VanEck Gold Miners ETF (GDX) jumping nearly 20% since the start of the year, significantly outperforming broader equity markets. Meanwhile, the supply of tokenized gold continues to expand, with issuance outpacing redemptions by millions of dollars weekly. Data from RWA.xyz shows transaction volumes for gold-backed cryptos have surged 53.7% month-over-month.

Several factors have contributed to gold’s rise, including a strengthening U.S. dollar, escalating trade tensions, and seasonal demand from China’s Spring Festival. According to the World Gold Council, global gold demand in 2024 reached 4,945.9 tons, worth approximately $460 billion.

In contrast, major cryptocurrencies have struggled to keep pace. Bitcoin (BTC) has posted a modest 3.6% gain this year, driving the bitcoin-to-gold ratio to a three-month low, while Ether (ETH) has slumped over 17.6%. The CoinDesk 20 Index remains nearly flat, up just 0.5% year-to-date.

Despite the divergence, some analysts argue that bitcoin’s long-term outlook remains strong. “Gold’s surge isn’t a threat to bitcoin—it’s a preview of what’s to come,” said Mike Cahill, core contributor to the Pyth Network, in a statement to CoinDesk. “Right now, investors are prioritizing traditional safe-havens, but when market sentiment shifts and liquidity returns, BTC could stage a significant rally.”

Cahill added that bitcoin remains one of the hardest assets available, second only to gold. “With the prospect of crypto-friendly policies under Trump’s administration, bitcoin stands to benefit massively as institutional adoption accelerates,” he concluded.