Gold has had an impressive performance this year. During its rally in 2025, the price of gold exceeded 3,000 and 4,000 dollars for the first time in history.
The precious metal has surged by approximately 60% since January 1, 2025.
Gold vs. Bitcoin
Bitcoin, which many consider as the digital equivalent of gold, has not performed so well. In the same period, the price of the largest cryptocurrency fell by 5%.
Therefore, it is quite ironic that the same technology that Bitcoin introduced is now being used to facilitate much easier investment exposure in gold.
What is Tether Gold (XAUT)?
Gold-backed cryptocurrency tokens like Tether Gold (XAUT) allow anyone in the world to add gold to their portfolio instantly (although with some details that we will explain later).
XAUT is a gold-backed token issued by Tether, which also issues the largest stablecoin in the world, USDT. Basically, XAUT is similar to dollar-pegged stablecoins that are already known to cryptocurrency investors. Each XAUT token in circulation is backed by one fine troy ounce of gold held by Tether.
XAUT is available as an ERC-20 token on the Ethereum blockchain, and it can be bought on both centralized exchanges and DEX.
Tokens can be redeemed directly for physical gold, but this is only relevant for a few investors in practice. This is because you need to hold the value of at least one gold bar in XAUT to be able to redeem it for physical gold. Tether says that customers who want to exchange their tokens for physical gold must deposit at least 430 XAUT (1.8 million dollars at the current price).
Tether launched XAUT in 2020, shortly after Paxos launched PAXG in September 2019. At the time of writing this article, XAUT represents gold worth approximately $2.1 billion. The second largest gold-backed token, PAXG, is not far behind, with a market capitalization of $1.4 billion.
It is worth noting that Tether is among the 30 largest gold holders in the world and owns approximately 116 tons of this precious metal. However, only a portion of these reserves back XAUT, as the number of tokens in circulation corresponds to about 16.2 tons of gold (1,329 gold bars).
Why do investors choose XAUT?
XAUT is one of the easiest ways to gain exposure to gold as an investment, especially if you are already part of the crypto ecosystem. You just need a wallet compatible with Ethereum with some funds, and you can buy XAUT in seconds using a DEX like Uniswap.
When I bought XAUT on Uniswap, I had the same type of 'aha moment' that I felt when I started in the crypto world. Realizing that I added gold to my portfolio in seconds and without KYC or other lengthy processes reaffirmed to me that blockchain already allows for very interesting things, even though the community always complains about the lack of adoption.
You can also sell XAUT as easily as it is bought, which is much more practical than selling physical gold. This makes it one of the most liquid ways to gain exposure to gold. The XAUT market is open 24/7, and anyone in the world can access it instantly thanks to decentralized exchanges.
Another advantage of XAUT is its divisibility. With XAUT, you can have exposure to as little as 0.000001 ounces of gold, making it truly accessible for everyone.
What should you consider when buying gold-backed tokens like XAUT?
Although gold-backed tokens like XAUT are a very convenient way to invest in gold, holding them is not the same as owning physical gold.
The most important thing is that these tokens have counterparty risk. Ultimately, gold-backed tokens depend on trust in the issuer (for example, Tether in the case of XAUT) to maintain and secure the gold reserves and to fulfill the redemption. If the custodian fails financially, acts dishonestly, or loses access to the gold, the value of the tokens may drop or you may not be able to recover your investment.
Furthermore, the on-chain infrastructure brings its own set of risks: hacks, technical failures, or issues in smart contracts could lock you out of your tokens or cause the number of tokens to not reflect what is actually in reserve.
Converting the tokens back into physical gold or cash is not always straightforward. Redemptions may require a minimum, have extra costs, and some geographic or legal limitations. In times of high volatility, the issuer may pause or delay redemptions. On the other hand, owning physical gold gives you direct control, as you can store it and sell it whenever you want.
In this article, we focus on XAUT because it is the most popular gold-backed token. However, it is worth mentioning that PAXG is very similar in function, and the choice between the two simply comes down to which issuer you trust more (Tether or Paxos).
What's next for gold? Investors anticipate new price records in 2026.
Gold in 2025 has maintained its reputation as a 'safe haven' and proved to be one of the most successful investments. Its rally was driven by an unusual combination of factors: lower interest rates and real yields, increased geopolitical and trade uncertainty, a clear weakening of the US dollar, and constant demand from central banks.
CoinCodex's algorithmic projection of the price of gold, which uses the asset's price history, its volatility, and overall market trends, anticipates that gold will continue its rally throughout 2026 and reach a peak of about $6,400.
Although this forecast is extremely bullish, CoinCodex is not the only one projecting that the price of gold will continue to reach new all-time highs in 2026.
The major investment bank Goldman Sachs recently conducted a survey of 900 institutional investor clients, and 36% of them predict that gold will reach $5,000 in 2026. Meanwhile, 33% of the respondents gave a more conservative prediction that gold will remain between $4,500 and $5,000, which would also mark new all-time highs (the current record is around $4,377).
Daan Struyven, head of commodity research at Goldman Sachs, has given a price target of $4,900, mentioning the demand from central banks and the ongoing Fed rate cuts as the main factors that will drive higher gold prices.
Meanwhile, analysts from both JPMorgan and HSBC expect the price of gold to exceed $5,000 next year.
