Gold-backed cryptocurrency issuance hits three-year high as central bank purchases slow
Increased demand, particularly from ETFs, helped push the average quarterly price of gold to a record high.
By Francisco Rodriguez | Edited by Aoyon Ashraf May 3, 2025, 7:15 PM
Important facts:
- Overall demand for gold reached a nine-year record in the first quarter, driven by increased investment interest and increased purchases of bars and coins.
- Gold ETFs have seen investment growth, while gold-backed cryptocurrencies have seen a resurgence, with monthly transaction volumes up 77%.
- Despite reaching a record quarterly average price, gold prices have fallen slightly over the past week.
The gold market is seeing a shift in momentum, with central bank buying slowing while demand from exchange-traded funds and gold-backed cryptocurrencies is growing, with the latter hitting a three-year high as measured by the net mintage of tokens backed by the precious metal.
According to rwa.xyz, over $80 million worth of tokens have been issued in the last month. This growth has helped the sector's market capitalization increase by 6% to $1.43 billion. At the same time, monthly transaction volume has grown by 77% to $1.27 billion, indicating a significant resurgence of interest in digital forms of the precious metal.
The increase in token activity reflects a broader trend in the gold market.
According to the latest report from the World Gold Council, total gold demand in the first quarter of the year was 1,206 tonnes, up 1% year-on-year and the highest first-quarter figure since 2016. The increase came despite a slowdown in central bank purchases, which fell to 244 tonnes from 365 tonnes in the fourth quarter.
Gold ETFs played a key role in this shift. Investment interest more than doubled to 552 tonnes, indicating a shift in investors to the precious metal that has historically been known to central banks.
These inflows helped push the average quarterly gold price to a record $2,860 an ounce, up 38% from a year earlier. However, the price fell 2.35% last week after rising 23.5% year-to-date, while risk assets including cryptocurrencies have gained. Spot gold is currently trading at $3,240.
While traditional demand for gold, such as from the jewellery industry, has declined to minimal levels, there is strong demand for bars and coins, particularly in China.
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