Gold’s Digital Rally Signals Rising Stress on the US Dollar

Gold-backed stablecoins led by Tether’s XAUt surge as central banks diversify away from the dollar, underscoring a shift toward safe-haven assets. XAUt now represents more than half of the gold-backed stablecoin market, with over $2.2 billion in value.

Rich by Coin

2026-01-26

The market for tokenized gold is expanding in step with rising demand for physical bullion, highlighting a broader shift toward traditional safe-haven assets as geopolitical tensions and trade uncertainty push investors away from the US dollar. On Monday, Tether said its Tether Gold (XAUt) now represents more than half of the entire gold-backed stablecoin market, with a total value exceeding $2.2 billion. Tether disclosed that 520,089 XAUt tokens were in circulation at the end of the fourth quarter, with each token backed one-for-one by physical gold held in reserve. CEO Paolo Ardoino said the company’s Tether Gold investment vehicle, which holds the bullion backing XAUt, has grown large enough to sit alongside some sovereign gold holders in terms of scale.

The announcement came as Comex gold eclipsed $5,000 a troy ounce for the first time, following a year-to-date gain of about 17%. Gold’s rally has been years in the making, driven in large part by central banks steadily reducing their reliance on the US dollar and rebuilding bullion reserves as a hedge against currency risk, rising geopolitical tension and, to a lesser degree, sanctions exposure. Central banks accelerated their buying in the second half of 2025, buying a net 220 tonnes of gold in the third quarter, according to data from the World Gold Council. The renewed accumulation reflects a broader effort by reserve managers to diversify away from dollar-denominated assets and toward stores of value that sit outside the global financial system.

Those flows have coincided with a sustained slide in the dollar since early 2025. The US Dollar Index (DXY) fell 9.4% last year, its worst annual performance since 2017, and has extended its decline this month, dropping to its lowest level since September. Since Jan. 19, the index has dropped another 2.4%, according to Bloomberg data. Some analysts warn that the move may not be over, with Otavio Costa of Azuria Capital noting that the dollar has broken below a long-term support trend line for the first time in more than a decade.