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Tether’s tokenized gold product, Tether Gold (XAUt), saw reserves expand sharply in the first quarter as investor demand for bullion increased amid macroeconomic uncertainty ahead of the Iran war.
In its latest report, Tether said XAUt surpassed $3.3 billion in market capitalization during the first quarter, representing a 36% increase over the period.
The company disclosed that 707,741 XAUT tokens were in circulation at the end of the quarter, with each token backed by one troy ounce of physical gold held in reserve.
Tether attributed the growth to a broader “flight to hard assets” as investors sought refuge from geopolitical tensions and shifting monetary conditions.
The increase comes amid a volatile quarter for gold. Prices climbed early in the year as investors moved into safe-haven assets, driven by geopolitical tensions and expectations that the Federal Reserve would begin cutting interest rates.
The precious metal later pulled back as immediate rate-cut expectations faded and the US dollar strengthened, reducing bullion demand. Some investors also locked in gains after the earlier rally, where prices briefly peaked above $5,500 a troy ounce. Gold was trading at around $4,500 per troy ounce at the time of reporting.
Year to date, XAUT’s US dollar price is up 4.37%, according to Yahoo Finance data.
Tether Gold (XAUt) market cap before the latest update. Source: CoinMarketCap
Related: Bitwise launches actively managed ETF pairing Bitcoin with gold
Demand for tokenized commodities is on the rise
XAUT accounts for more than half of the tokenized gold market, having expanded by roughly $1.1 billion since the start of the year.
Its closest competitor, PAX Gold (PAXG), issued by Paxos, has a market cap of nearly $2.2 billion and is supervised by the New York State Department of Financial Services (NYDFS).
Together, the two tokens dominate a niche but growing segment of the digital asset market that aims to bring traditional commodities like gold onto blockchain rails.
Their growth reflects rising demand for tokenized commodities, as investors look for easier ways to gain exposure to physical assets without handling storage or logistics. These tokenized products also allow gold to be traded around the clock and transferred globally, features that are not available in traditional bullion markets.
These assets sit within a broader market for tokenized real-world assets valued at nearly $31 billion, according to industry data.
The total market for tokenized real-world assets. Source: RWA.xyz
Related: Tokenized RWA market grows 420% since 2025 on regulatory clarity, access
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