Gold-backed cryptocurrency minting reaches a three-year high as central bank purchases decline

The gold market is undergoing changes, with central bank purchases slowing down and demand for exchange-traded funds (ETFs) and gold-backed cryptocurrencies growing. The latter recently reached its highest level in three years, measured by net minting volume.

According to data from rwa.xyz, over $80 million worth of gold-backed tokens were minted in the past month. This growth pushed the total market value of the industry up by 6% to $1.43 billion. Meanwhile, monthly transfer volume surged by 77% to $1.27 billion, marking a significant resurgence of interest in digital representations of gold.

The latest report from the World Gold Council shows that total gold demand in the first quarter of this year reached 1,206 tons, a 1% increase year-on-year, marking the strongest first quarter since 2016. Despite central bank purchases slowing to 244 tons, down from 365 tons in the fourth quarter, demand remains strong. Gold ETFs have played a central role in this shift. Investment demand more than doubled to 552 tons, indicating that investors are turning to gold, a move historically dominated by central banks.

These inflows have driven the average quarterly price of gold to a record $2,860 per ounce, a 38% increase year-on-year. However, gold prices fell by 2.35% last week, despite having risen 23.5% year-to-date.