Why Investors Are Turning To Xaut: Market Analysis And Gold Forecast Through 2026

What Happened

In light of this, it’s quite ironic that the very technology Bitcoin pioneered is now being used to make investment exposure to gold more accessible than ever.

XAUT is a gold-backed token issued by Tether, which also issues the world’s largest stablecoin, USDT. Conceptually, XAUT is similar to the dollar-pegged stablecoins crypto investors are already closely familiar with. Each XAUT token in circulation is backed by one fine troy ounce of gold held by Tether.

The tokens can be directly redeemed for physical gold, but this is only relevant for a small number of investors in practice. This is because you need to have 1 gold bar’s worth of XAUT tokens to redeem your tokens directly for physical gold. Tether says clients who want to redeem for physical gold should deposit at least 430 XAUT ($1.8 million at current prices).

Tether launched XAUT in 2020, shortly after Paxos launched PAXG in September 2019. At the time of writing, XAUT tokenizes roughly $2.1 billion worth of gold. The second-largest gold-backed token, PAXG, is not too far behind with a market cap of $1.4 billion.

Why are investors choosing XAUT?

XAUT is one of the easiest ways to get exposure to gold as an investment, especially if you are already in the crypto ecosystem. All you need is an Ethereum-compatible wallet with some funds, and you can buy XAUT within seconds on a DEX like Uniswap.

While gold-backed tokens like XAUT are an extremely convenient way to invest in gold, holding them isn’t quite the same as holding physical gold.

On top of that, the on-chain infrastructure introduces its own set of risks: hacks, technical flaws, or smart contract malfunctions could lock you out of your tokens or cause the token supply to drift from what’s actually held in reserve.

What’s next for gold: Investors anticipate new price records in 2026

Market Context

Gold has been a tremendous performer this year. During its 2025 rally, the gold price has broken the $3,000 and $4,000 milestones for the first time in history.

Bitcoin, which many argue is gold’s digital counterpart, hasn’t been doing so hot. In the same time frame, the price of the largest cryptocurrency declined by 5%.

You can, of course, also sell XAUT as easily as you can buy it, which is much more convenient than the process of selling physical gold. This makes it one of the most highly liquid methods of getting exposure to gold. The market for XAUT is open 24/7, and anyone across the globe can access it instantly thanks to decentralized exchanges.

Why It Matters

Most importantly, these tokens come with counterparty risk. Gold-backed tokens are ultimately based on trust in the issuer (for example, Tether for XAUT) to maintain the gold reserves, keep them properly secured, and honor redemptions. If the custodian fails financially, acts dishonestly, or can no longer access the bullion, the tokens may drop in value, or you may not be able to recover that value at all.

Converting tokens back into physical gold or cash isn’t always straightforward. Redemptions can come with minimum thresholds, extra costs, and geographic or legal constraints, and in volatile conditions, the issuer may pause or slow redemptions. Meanwhile, owning physical gold gives you direct control as you can store it yourself and sell it whenever you choose.

Details

The precious metal is up roughly 60% since January 1, 2025.

Gold vs. Bitcoin

What is Tether Gold (XAUT)?

Gold-backed crypto tokens like Tether Gold (XAUT) allow anyone across the globe to instantly add gold to their portfolio (with some caveats that we’ll explain later).

XAUT is available as an ERC-20 token on the Ethereum blockchain, and can be bought on a variety of centralized exchanges and DEXes.

It’s worth highlighting that Tether is among the 30 largest gold holders in the world, and owns roughly 116 tons of the precious metal. However, only a portion of these reserves is being used to back XAUT, as the amount of tokens in circulation corresponds to about 16.2 tons of gold (1,329 gold bars).

When buying XAUT on Uniswap, I had the same kind of “aha moment” that I first got when I just got started with crypto. The realization that I just added some gold to my portfolio in seconds without KYC or other tedious processes reminded me that blockchain does indeed enable some very cool things already, despite the community constantly lamenting the lack of adoption.

Another advantage of XAUT is its divisibility. With XAUT, you can get exposure to as little as 0.000001 ounces of gold, making it truly accessible to everyone.

What to keep in mind when buying gold-backed tokens like XAUT

In this article, we mostly focused our attention on XAUT, since it’s the most popular gold-backed token. However, it’s worth mentioning that PAXG is functionally very similar, and the choice between the two really just comes down to which issuer you trust more (Tether or Paxos).