Gold-Backed Crypto Minting Volume Hits 3-Year High as Central Bank Buying Drops
Gold-Backed Crypto Minting Volume Hits 3-Year High as Central Bank Buying Drops
A surge in demand, particularly from ETFs, pushed the average quarterly gold price to a record high.
- Total gold demand reached its highest first-quarter level in nine years, driven by increased investment demand and bar and coin purchases.
- Gold ETFs saw a surge in investment, while gold-backed cryptocurrencies experienced a resurgence with a 77% increase in monthly transfer volume.
- Despite reaching a record average quarterly price, gold experienced a slight dip in the past week.
Gold-backed cryptocurrencies are gaining momentum, with minting volumes hitting a three-year peak while central bank purchases are declining. The increase in demand, notably from Exchange-Traded Funds (ETFs), has propelled the average quarterly gold price to an all-time high.
The first quarter of this year marked a significant milestone for the gold market, registering the highest total gold demand in nine years due to heightened investment interest and robust bar and coin acquisitions. Investment in Gold ETFs surged, coinciding with a 77% spike in monthly transfer volume for gold-backed cryptocurrencies.
Despite achieving record-breaking average quarterly prices, the price of gold experienced a slight setback recently. The shift in market dynamics is evident as central bank acquisitions slow down while demand from ETFs and digital tokens backed by gold grows substantially.
Recent data from rwa.xyz indicates that over $80 million worth of gold-backed tokens were minted last month alone, contributing to a 6% increase in the sector's market capitalization to reach $1.43 billion. Concurrently, monthly transfer volume soared by 77% to $1.27 billion, highlighting a renewed interest in digital representations of gold.
This surge in token activity aligns with broader trends witnessed across the gold market landscape. The World Gold Council's latest report reveals that total first-quarter gold demand reached 1,206 tonnes—a notable 1% rise compared to the previous year and the most robust performance since 2016. Despite a slowdown in central bank acquisitions dropping to 244 tonnes from 365 tonnes in Q4, investment demand through ETFs doubled to 552 tonnes.
Such inflows have significantly influenced the soaring average quarterly price of gold, which reached an unprecedented $2,860 per ounce—a remarkable uptick of 38% annually. Although witnessing a dip of 2.35% last week following a year-to-date surge of 23.5%, amidst simultaneous gains observed in risk assets like cryptocurrencies; spot gold is presently trading at $3,240.
While traditional sources of gold demand like jewelry experienced declines reaching lows reminiscent of pandemic times, bar and coin purchases remained resilient particularly within markets like China.
