Tether's XAUt token saw its backing reserves grow 9.5% in the second quarter even as the price of physical gold fell 14.1%, marking the worst quarterly performance for bullion since the second quarter of 2013, according to Tether's August 3 announcement.
The XAUt reserves grew while gold prices declined sharply. Tether does not publicly disclose the total number of XAUt holders, but the growth in circulating supply shows new participants entered the product despite unfavorable spot conditions for gold itself.
XAUt is a stablecoin where each token represents one fine troy ounce of allocated London Good Delivery gold bars held in Tether's vaults. The product launched in 2020 and operates on multiple blockchains, including Ethereum and Tron. Unlike synthetic gold derivatives or futures contracts, XAUt tokens grant redemption rights to the underlying metal; holders can exchange tokens for physical bars subject to minimum order thresholds and logistics fees.
The second quarter gold decline reflected sustained high interest rates in the United States and a stronger dollar, which made bullion less attractive to foreign buyers. Central banks continued accumulating gold during the period, but investment demand from retail and institutional buyers softened. Spot gold prices recovered modestly in early July after the Federal Reserve began indicating willingness to cut rates later in 2026.
Tether's announcement did not quantify the dollar value of XAUt reserves or provide a breakdown of backing by jurisdiction or vault operator. The company maintains that all XAUt is backed one-to-one by physical gold and publishes periodic attestations from third-party auditors.
XAUt's 9.5% growth in a quarter when gold prices fell 14.1% means the token added reserves while the value of each ounce of gold declined sharply. Without public holder data, the mechanism behind the growth cannot be precisely determined from available disclosures.
The broader tokenized commodity market has grown as institutional investors seek blockchain-native exposure to physical assets. Other platforms offer tokenized gold, silver, and rare earth metals, though XAUt remains the largest by circulation among gold tokens. If XAUt maintains its growth trajectory as gold prices stabilize, the token could attract further institutional participation as a custody and settlement alternative to traditional allocated gold accounts.
