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.
The gold market is undergoing a notable transformation, with a decline in central bank purchases and a rise in demand for exchange-traded funds (ETFs) and gold-backed cryptocurrencies. Gold-backed cryptocurrencies have recently reached a three-year high in net minting volume, indicating an increased interest in tokens supported by the precious metal.
Recent data from rwa.xyz reveals that over $80 million worth of these tokens were created in the past month alone, leading to a 6% increase in the sector's market cap to $1.43 billion. Furthermore, the monthly transfer volume surged by 77% to $1.27 billion, showcasing a significant resurgence of enthusiasm for digital forms of gold representation.
This uptrend in token activity is reflective of broader shifts within the gold industry. The World Gold Council's latest findings indicate that total gold demand during the first quarter hit 1,206 tonnes—a 1% rise compared to the previous year and the strongest first-quarter performance since 2016. This increase occurred despite a slowdown in central bank acquisitions, which decreased from 365 tonnes in Q4 to 244 tonnes.
Gold ETFs have been pivotal in this changing landscape. Investment demand for these funds has more than doubled to reach 552 tonnes, hinting at an influx of investors into the precious metal—an action historically associated with central banks.
These investments have driven the average quarterly price of gold to an all-time high of $2,860 per ounce, marking a substantial 38% surge from the previous year. Nevertheless, following a remarkable year-to-date increase of 23.5%, there was a slight dip of 2.35% last week as other risk assets like cryptocurrencies gained momentum. Currently, spot gold is trading at $3,240.
While traditional sectors like jewelry experienced reduced demand due to pandemic-related challenges, interest remained strong for bars and coins—especially noticeable in China.
While traditional gold demand, such as jewelry, saw a downturn—dropping to pandemic-era lows—bar and coin demand stayed elevated, especially in China.
