Gold-Backed Cryptos Struggle as Gold Price Dips; Wall Street Sees Long-Term Potential

Gold-backed cryptocurrencies have faced a setback this week, as the price of gold slipped after a strong 2025 rally. Despite gold’s earlier rise of over 10% this year, the drop came amid speculation surrounding U.S. President Donald Trump’s proposed reciprocal tariffs, which are viewed by some as a negotiation tactic rather than a direct policy change.

Gold-backed tokens, such as Paxos Gold (PAXG) and Tether Gold (XAUT), have seen their value drop around 1%, with prices hovering near $2,900. In contrast, the broader cryptocurrency market saw a positive performance, with the CoinDesk 20 Index climbing 5.7% and the MarketVector Digital Assets 100 Index (MVDA) rising by 3.4%.

Gold’s decline was attributed to growing concerns that the tariff threats from the U.S. would be used as a bargaining tool in trade negotiations. This sentiment negatively impacted safe-haven assets like gold and the U.S. dollar, both of which weakened.

Nevertheless, analysts see a silver lining for gold, with reports suggesting that the recent dip could be a buying opportunity for those seeking hedges amid global economic uncertainties. Wall Street firms have recently increased their gold price forecasts, which could, in turn, benefit gold-backed digital assets as they are directly linked to gold bullion.

Citi has raised its short-term gold target to $3,000 per ounce, with an average price forecast of $2,900 for 2025. Meanwhile, UBS has adjusted its 12-month forecast to $3,000 per ounce, indicating a strong outlook for gold and potentially a rebound for gold-backed tokens in the coming months.