Gold’s digital rally mirrors increasing stress on US dollar
Tether’s XAUt tokenized gold now accounts for more than half of the gold-backed stablecoin market as the US dollar weakens amid renewed safe-haven demand.
The market for tokenized gold is expanding in step with rising demand for physical bullion, highlighting a broader shift toward traditional safe-haven assets as geopolitical tensions and trade uncertainty push investors away from the US dollar.
On Monday, Tether said its Tether Gold (XAUt) now represents more than half of the entire gold-backed stablecoin market, with a total value exceeding $2.2 billion.
Tether disclosed that 520,089 XAUt tokens were in circulation at the end of the fourth quarter, with each token backed one-for-one by physical gold held in reserve.
CEO Paolo Ardoino said the company’s Tether Gold investment vehicle, which holds the bullion backing XAUt, has grown large enough to sit alongside some sovereign gold holders in terms of scale.
The announcement came as Comex gold eclipsed $5,000 a troy ounce for the first time, following a year-to-date gain of about 17%.
Gold’s rally has been years in the making, driven in large part by central banks steadily reducing their reliance on the US dollar and rebuilding bullion reserves as a hedge against currency risk, rising geopolitical tension and, to a lesser degree, sanctions exposure.
Central banks accelerated their buying in the second half of 2025, buying a net 220 tonnes of gold in the third quarter, according to data from the World Gold Council. The renewed accumulation reflects a broader effort by reserve managers to diversify away from dollar-denominated assets and toward stores of value that sit outside the global financial system.
Those flows have coincided with a sustained slide in the dollar since US President Donald Trump took office in early 2025. The US Dollar Index (DXY) fell 9.4% last year, its worst annual performance since 2017, and has extended its decline this month, dropping to its lowest level since September.
Some analysts warn that the move may not be over. Otavio Costa of Azuria Capital said the dollar has broken below a long-term support trend line for the first time in more than a decade, with confirmation likely on a monthly basis.
“The debasement trade is now well understood,” Costa wrote, “but the next phase is a broad weakening of the US dollar relative to other fiat currencies.”
Bitcoin (BTC) has yet to meaningfully replace gold in that role. While often pitched as a hedge against currency debasement, Bitcoin has failed to attract the same steady, long-term flows, particularly from older and more conservative investors.
An analysis by investment strategist Karel Mercx of Dutch financial advisory brand and investment magazine Beleggers Belangen found that Bitcoin has so far fallen short of its promise as a debasement trade, leaving gold as the preferred hedge.
Asanat Analysis — Why it matters
Tether's dominance in tokenized gold—commanding >50% of the XAUt market at $2.2B—signals institutional acceptance of blockchain-settled precious metals. This matters because it bridges traditional safe-haven behavior with crypto infrastructure, lowering friction for institutional reserve diversification. The timing is significant: central banks bought 220 tonnes in Q3 2025 alone, and XAUt's growth mirrors this macro flight-to-safety. By tokenizing physical bullion with verifiable on-chain custody, Tether has effectively democratized access to reserves-grade assets and created a use case independent of stablecoin volatility concerns.
The dollar's 9.4% annual decline and break of decade-long support levels reflects a structural repricing of dollar dominance. Tether's XAUt growth is symptomatic of this shift, not causal—it benefits from de-dollarization flows rather than creating them. However, the emergence of tokenized precious metals on blockchain highlights a critical second-order effect: if central banks and large holders increasingly use digital gold vehicles, it may accelerate blockchain adoption for reserve asset settlement, potentially shifting entire tranches of global finance infrastructure toward decentralized rail.