Market News

Crypto Demand Surges as Central Banks Pull Back from Gold Purchases

In a notable shift within the gold market, gold-backed cryptocurrencies are witnessing remarkable growth amidst a decline in central bank purchases.

Recent data reveals that the net minting volume of these digital tokens reached a three-year high, with over $80 million worth minted in the last month alone.

This surge has boosted the market cap of gold-backed cryptocurrencies by 6%, bringing it to $1.43 billion, while monthly transfer volume soared by 77% to $1.27 billion.

The World Gold Council reports an overall increase in gold demand, with a total of 1,206 tonnes purchased in the first quarter, marking a 1% annual rise.

However, central bank acquisitions have dipped significantly, falling from 365 tonnes in the previous quarter to just 244 tonnes.

Driving this trend are gold exchange-traded funds (ETFs), which saw investment demand more than double to 552 tonnes, attracting investors typically interested in safe-haven assets.

Despite gold's fluctuating price—which peaked at a record $2,860 per ounce but dipped 2.35% last week—interest in digital gold alternatives remains strong.

While traditional gold demand such as jewelry has declined, demand for bars and coins, particularly in China, continues to thrive.

As central banks scale back their gold purchases, investors are increasingly looking toward the burgeoning sector of gold-backed cryptocurrencies as a viable alternative.

This dynamic illustrates a growing recognition of digital assets in the precious metals market, positioning crypto as a compelling option for investors seeking stability.