Gold’s blistering 70% annual rise – its best performance in almost half a century – has led to a surge in demand for exposure to gold. Amid rising geopolitical tensions and the threat of new tariffs, institutional and retail investors alike sought refuge, but one corner of the market stood out: tokenized gold.
gold-backed tokens like Zout$4,755.29 Paxos Gold (PAXG) recorded explosive growth last year, outpacing the trading volume of most traditional gold exchange traded funds (ETFs), according to a report from crypto exchange CEX.io.
Tokenized gold transactions will reach $178 billion in 2025, with $126 billion of that occurring in the last quarter of this year alone. This outpaces all ETFs in terms of global trading volume except for one U.S.-listed ETF, SPDR Gold Shares (GLD), which has $165 billion in assets under management.
“If tokenized gold were an ETF, it would already rank second in trading volume,” the report said.
Tokenized gold market cap increases compared to major gold ETFs (CEX.io)
Still, the sector remains top-heavy. Tether’s XAUT alone accounted for 75% of trading volume in the fourth quarter, the report notes.
The market capitalization of tokenized gold also skyrocketed, surging 177% to over $4.4 billion, the report notes. Still, it’s tiny compared to the overall size of the gold market, which is $32 trillion.
Retail demand is the main driver of tokenized gold. Unlike some tokenized assets that are restricted to accredited investors, gold tokens allow fractional ownership by individual investors and have no minimum investment amount. This will enable a wider range of investors to participate, particularly in emerging markets where gold-linked investment products are not readily available.
On Tuesday, gold prices hit $4,750, up nearly 10% since the start of the year, but Gracie Chen, CEO of cryptocurrency exchange Bigget, said she expects the price to head towards $5,000.
“With tariffs back in focus, capital is likely to move towards gold-dominated defense assets,” he said. “In terms of outlook, we see gold targeting the $5,000 level. If current conditions continue, that won’t be far away.”
