The gold market is experiencing a significant transformation as gold-backed cryptocurrency minting reaches a three-year high, coinciding with a notable decline in central bank purchases. Over $80 million worth of gold-backed tokens were minted in the past month, reflecting a growing interest in digital assets tied to the precious metal.
Key Takeaways
- Gold-backed crypto minting volume hits a three-year high.
- Central bank gold purchases drop significantly.
- Investment demand from ETFs has more than doubled.
- Average quarterly gold price reaches a record $2,860 per ounce.
Surge In Gold-Backed Crypto Minting
Recent data indicates that the minting volume for gold-backed cryptocurrencies has surged, with over $80 million worth of tokens created in just one month. This increase has propelled the market capitalization of gold-backed tokens to approximately $1.43 billion, marking a 6% rise. Additionally, the monthly transfer volume for these tokens has skyrocketed by 77%, reaching $1.27 billion.
This surge in activity highlights a shift in investor sentiment, as more individuals and institutions turn to digital representations of gold amid changing market dynamics.
Decline In Central Bank Purchases
In contrast to the booming crypto market, central bank purchases of gold have seen a significant decline. According to the World Gold Council, central banks acquired only 244 tonnes of gold in the first quarter of 2025, a sharp decrease from 365 tonnes in the previous quarter. This downturn in central bank buying is noteworthy, as these institutions have historically been major players in the gold market.
ETF Demand Drives Gold Prices Higher
The decline in central bank demand has been offset by a remarkable increase in investment demand, particularly from exchange-traded funds (ETFs). Investment demand has more than doubled, reaching 552 tonnes in the first quarter, indicating a robust shift towards gold as a safe-haven asset. This influx of investment has contributed to a record average quarterly gold price of $2,860 per ounce, a 38% increase from the previous year.
Despite a recent dip of 2.35% in gold prices, the overall trend remains positive, with spot gold currently trading at $3,240.
Traditional Gold Demand Trends
While investment demand for gold has surged, traditional demand sources such as jewelry have experienced a downturn, falling to levels not seen since the pandemic. However, demand for gold bars and coins remains strong, particularly in China, where consumers continue to seek physical gold as a hedge against economic uncertainty.
Conclusion
The current landscape of the gold market reflects a significant shift in investor behavior, with a growing preference for gold-backed cryptocurrencies and ETFs over traditional central bank purchases. As the market evolves, it will be interesting to see how these trends impact the future of gold as both a physical asset and a digital commodity.
