Why Investors Are Turning to XAUT: Market Analysis and Gold Forecast Through 2026

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.

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

Gold vs. Bitcoin

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%. 

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.

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 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. 

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

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. 

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).

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. 

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.

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.

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

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. 

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.

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.

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.

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). 

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

Gold in 2025 has lived up to its reputation as a “safe haven” and has proven to be one of the most successful investments. Its rise was driven by a rare combination of factors: lower interest rates and real yields, heightened geopolitical and trade uncertainty, a noticeable weakening of the U.S. dollar, and steady demand from central banks.

The algorithmic gold price forecast from CoinCodex, which is based on the asset’s price history, volatility, and broader market trends, anticipates that gold will continue rallying throughout 2026 and hit a peak at around $6,400. 

While this forecast is extremely bullish, CoinCodex isn’t alone in projecting that the gold price will continue to hit new all-time highs in 2026. 

Major investment bank Goldman Sachs recently conducted a survey of 900 institutional investor clients, and 36% of them predict that gold will hit $5,000 in 2026. Meanwhile, 33% of the respondents provided a more conservative prediction that gold will reach between $4,500 and $5,000, which would also result in new all-time highs (the current record is at around $4,377).

Daan Struyven, head of commodity research at Goldman Sachs, has provided a $4,900 price target, citing central bank demand and continued Fed rate cuts as key drivers that will lead to higher gold prices.

Meanwhile, analysts at both JPMorgan and HSBC expect the gold price to surpass $5,000 next year.