The gold market is experiencing a significant shift, as demand from exchange-traded funds (ETFs) and gold-backed cryptocurrencies has surged, offsetting a decline in central bank buying. Recent data reveals that the net minting volume for gold-backed tokens hit a three-year high, signaling strong interest in digital representations of the precious metal.
According to rwa.xyz, over $80 million worth of gold-backed tokens were minted in the last month alone, fueling a 6% rise in the sector’s market capitalization, which now stands at $1.43 billion. The increase in token minting was accompanied by a 77% jump in monthly transfer volume, reaching $1.27 billion, reflecting renewed enthusiasm for this innovative form of gold investment.
This uptick in gold-backed crypto activity aligns with a broader trend in the gold market. Despite central banks reducing their gold purchases, demand for the metal remains robust. The World Gold Council’s latest report indicates that total gold demand in Q1 of 2025 reached 1,206 tonnes, a 1% year-over-year increase and the strongest first quarter since 2016. However, central bank purchases fell significantly to 244 tonnes, down from 365 tonnes in the fourth quarter.
The growth in gold-backed ETFs has been particularly noteworthy, with investment demand more than doubling to 552 tonnes. This shift suggests that individual and institutional investors are increasingly turning to gold as a safe haven, mirroring the actions typically seen from central banks during times of uncertainty.
These factors helped drive the average quarterly gold price to a record $2,860 per ounce, a 38% increase from the same period last year. However, despite the year-to-date gains, gold prices recently dipped by 2.35%, while risk assets like cryptocurrencies experienced growth. At present, spot gold is trading at $3,240.
Meanwhile, traditional gold demand, including jewelry, saw a decline, reaching pandemic-era lows, but bar and coin demand remained strong, particularly in China, where investors continue to seek physical gold as a store of value.
