Central banks accumulated over 1,000 metric tons of gold in 2024 for the third consecutive year, pushing the precious metal to record levels near $3,400 per troy ounce and lifting Tether's gold-backed digital token XAUt to an $800 million market capitalization. The unprecedented institutional demand reflects growing concerns about economic instability and geopolitical tensions under President Donald Trump's trade policies.
What to Know:
- Central banks purchased more than 1,000 tons of gold in 2024, marking three straight years above that threshold after decades of being net sellers
- Gold ETFs recorded $38 billion in inflows during the first half of 2025, the largest surge in five years, adding 397.1 tons to collective holdings
- Tether Gold (XAUt) surged 40% over 12 months, backed by 7.66 tons of physical bullion supporting over 259,000 tokens in circulation
Digital Gold Tracks Physical Metal's Performance
Tether Gold, launched in January 2020, has closely mirrored spot gold's 40% surge over the past year. The token provides blockchain-based exposure to physical bullion through direct backing by fine troy ounces of gold, verified by BDO Italia in the company's latest attestation report.
XAUt trades on major cryptocurrency exchanges including Bybit, Bitfinex, BingX and KuCoin.
The token recently expanded to Thailand through Maxbit exchange and launched an omnichain version on The Open Network through Tether's USDT0 liquidity network.
The digital asset combines gold's traditional safe-haven appeal with cryptocurrency features like enhanced portability and divisibility. Each token represents direct ownership of physical gold stored in secure vaults, offering an alternative to traditional ETF structures.
Institutional Appetite Breaks Historical Patterns
Christopher Gannatti, global head of research at WisdomTree, called the current pace of central bank accumulation abnormal. "For decades, central banks were net sellers of gold," he wrote. "Now they're stockpiling it again."
The World Gold Council reported that most central bankers expect bullion reserves to continue rising over the next 12 months.
This reversal from historical selling patterns reflects concerns about currency weaponization and cross-border asset mobility during geopolitical instability.
Gold ETFs witnessed their largest inflows in five years during the first half of 2025, with $38 billion flowing into funds that increased physical holdings by 397.1 metric tons. Institutional investors have driven much of this demand as traditional safe-haven assets gain appeal amid economic uncertainty.
The surge extends beyond central banks to include pension funds, sovereign wealth funds and other large institutions seeking portfolio diversification. These investors view gold as protection against currency debasement and inflation risks that have resurfaced across major economies.
Economic Pressures Fuel Safe-Haven Demand
Trump's trade war policies have amplified economic instability fears, driving investors toward traditional safe-haven assets. Economist Peter Schiff highlighted persistent inflation risks as a key factor supporting gold's appeal, particularly as Federal Reserve officials expect price increases to accelerate.
Inflationary pressures have returned to the United States, with tariffs expected to push costs higher for both producers and consumers in the second half of the year. This outlook has prompted Federal Reserve caution regarding monetary policy adjustments.
Preston Caldwell, Morningstar's senior US economist, noted he has "delayed expectations of rate cuts" due to these inflationary trends. The combination of trade tensions, inflation concerns and geopolitical risks has created a favorable environment for gold investment across both traditional and digital formats.
Market Dynamics Support Continued Growth
Gold's price trajectory near $3,400 per troy ounce reflects multiple converging factors beyond central bank purchases. Geopolitical tensions, currency instability and recession fears have combined to create sustained demand across investor categories.
The digital gold market represented by XAUt offers additional accessibility for investors seeking exposure without traditional storage and insurance costs.
This blockchain-based approach appeals particularly to younger investors familiar with cryptocurrency platforms but seeking hard asset backing.
Technical factors also support continued strength, with ETF inflows providing steady physical demand that reduces available supply. The 397.1-ton increase in ETF holdings during the first half of 2025 represents significant market absorption that supports price levels.
Closing Thoughts
The convergence of central bank accumulation, institutional ETF demand and digital innovation through tokens like XAUt demonstrates gold's enduring appeal during uncertain times. With over 1,000 tons purchased annually by monetary authorities and record ETF inflows supporting prices near historic highs, both physical and digital gold markets reflect broader concerns about economic stability and currency reliability.