Minting of Gold-Backed Cryptocurrencies Hits Three-Year High with Central Bank Buying on the Decline

The gold market is undergoing a notable shift as central bank buying slows, while demand for gold-backed exchange-traded funds (ETFs) and gold-backed cryptocurrencies is on the rise. The recent minting of gold-backed tokens reached a three-year high, signaling a shift towards digital gold in investment strategies.

Data from rwa.xyz indicates that over $80 million in gold-backed tokens were minted in the past month, leading to a 6% increase in the sector’s overall market capitalization, which now stands at $1.43 billion. Additionally, monthly transaction volumes surged by 77%, totaling $1.27 billion, reflecting the growing appeal of tokenized gold as a new asset class.

This uptick in digital gold investments parallels broader trends in the physical gold market. According to the latest report from the World Gold Council, global gold demand in the first quarter of 2025 reached 1,206 tonnes, marking a 1% year-over-year increase, and the strongest first quarter since 2016. However, central banks reduced their purchases to 244 tonnes, down from 365 tonnes in the previous quarter.

A significant part of this demand shift can be attributed to gold-backed ETFs, which saw a more than doubling of investment demand, reaching 552 tonnes. This rise suggests that, while central banks are pulling back, private investors are increasingly turning to gold as a reliable store of value.

The surge in investment has driven the average quarterly price of gold to a record $2,860 per ounce, a 38% increase from last year. However, despite the strong year-to-date growth, gold prices experienced a dip of 2.35% last week, while riskier assets like cryptocurrencies showed positive returns. Spot gold is currently trading at $3,240.

While traditional gold demand, particularly in jewelry, has fallen to pandemic-era lows, there has been continued strength in the demand for gold bars and coins, especially in China, where investors seek the metal as a hedge against economic uncertainty.