Gold-Backed Cryptos Slip From Highs as Market Rout Forces Liquidations
Gold-linked cryptocurrencies such as Paxos Gold (PAXG) and Tether Gold (XAUT) pulled back from record levels on Friday, caught in the turbulence of a global sell-off that wiped $2.5 trillion from U.S. equity markets in a single session. The downturn followed President Donald Trump’s announcement of sweeping reciprocal tariffs that rattled investor confidence.
Initially, the precious metal and its digital counterparts surged, with investors turning to traditional safe havens amid the heightened geopolitical and economic uncertainty. PAXG hit a record $3,191 and XAUT climbed to $3,190—both outpacing gold’s spot price high of $3,167. But the rally was short-lived. As equity markets plunged, even safe-haven assets saw outflows, with gold dropping to $3,038 and its tokenized versions falling to $3,074 (PAXG) and $3,064 (XAUT).
Analysts point to forced selling as a major factor. When stocks plunge, investors often cash in their most liquid and profitable assets to meet margin calls and cover broader portfolio losses, leading to declines even in traditionally resilient instruments like gold.
The tariff shock sent shockwaves across global markets. The S&P 500 experienced its sharpest drop since the early days of the pandemic, and the Nasdaq 100 posted its largest single-day point decline ever, according to the Kobeissi Letter. Losses extended into Friday, with the MSCI World Index falling 4.3% following Thursday’s 3.7% slump.
Despite the pullback, gold-backed cryptocurrencies remain up roughly 17% year-to-date. Their strength has been underpinned by a series of Federal Reserve rate cuts, robust demand from Asian markets, and renewed central bank gold accumulation.
In February, central banks added a net 24 metric tons to their reserves, per the World Gold Council. Poland led with a 29-ton purchase, lifting its holdings to 480 tons—now 20% of its total reserves. China, Turkey, Jordan, and Qatar were also among the buyers.
