Gold-Backed Cryptocurrencies Surge as Precious Metal Hits Record Amid Trade War Worry

Gold-Backed Cryptocurrencies Surge as Precious Metal Hits Record Amid Trade War Worry

Gold-Backed Cryptocurrencies Surge as Precious Metal Hits Record Highs

Gold-backed cryptocurrencies are outperforming the broader market as gold itself experiences a historic rally, reaching a record $2,880 per ounce. The precious metal has gained nearly 10% so far this year, driven by escalating trade tensions between the U.S. and China, strong seasonal demand from the Spring Festival holidays, and an overall increase in investor interest in safe-haven assets.

PAX Gold (PAXG) and Tether Gold (XAUT), both backed by physical gold stored in vaults, have risen in tandem with the metal’s price, seeing significant increases in supply and trading activity. Data from RWA.xyz shows that transfer volumes for these tokens have surged 53.7% month over month, with new token mints outpacing burns by millions of dollars each week.

Traditional markets have also responded positively to gold’s rally. The VanEck Gold Miners ETF (GDX), which tracks gold mining stocks, has surged nearly 20% year-to-date, far outpacing the S&P 500.

Meanwhile, major cryptocurrencies have struggled to gain momentum. Bitcoin (BTC) has posted a modest 3.6% rise, pushing the bitcoin-to-gold ratio to a 12-week low. Ether (ETH) has fared worse, dropping over 17.6% since the start of the year, while the CoinDesk 20 Index remains nearly flat with a 0.5% gain.

Despite gold’s dominance, some analysts believe Bitcoin could still benefit from shifting market conditions. “Gold’s rally and Bitcoin’s dip aren’t a failure of the 'digital gold' narrative — they’re a setup,” said Mike Cahill, a core contributor to the Pyth Network. He suggests that once liquidity returns and risk appetite rebounds, Bitcoin could see a significant upside, particularly if pro-crypto policies gain traction under a potential Trump administration.

For now, however, gold-backed tokens continue to gain favor as investors seek stability amid global economic uncertainty.