The physical gold reserves backing Tether Gold rose 9.5% in the second quarter, in a period when gold itself had its worst quarter in thirteen years.
Both halves of that are worth holding together, because they point in opposite directions. Holders added ounces. The value of what they hold went down.
Gold’s Worst Quarter Since 2013
Gold fell 14.1% during the quarter, its worst three-month performance since the second quarter of 2013, according to TradingView data. The physical reserves backing XAUt grew over the same period rather than shrinking, which Tether said reflected growing demand for tokenized gold exposure.
Paolo Ardoino, chief executive of Tether, said in Monday’s XAUt attestation report that holders were using the weakness to accumulate. ‘Holders of Tether Gold are not only buying XAUt when the price of gold is rising. They are using periods of market weakness to increase their ownership of physical gold through a product that is fully backed, transparent, portable and accessible onchain,’ he said.
That is the issuer’s own framing of its own product in its own report, and the description of the token is Tether’s rather than an independent assessment. The reserve figure itself is the substantive part.
More gold, less money
Set the two quarters side by side and the picture sharpens.
XAUt’s physical reserves rose 36% in the first quarter to 707,747 fine troy ounces, valued at $3.3 billion at quarter-end. Adding another 9.5% in the second quarter takes the holding to roughly 775,000 ounces. Tether Gold now ranks as the largest distributed tokenized commodity product with $2.4 billion in total value as of Monday.
So the token holds around 9.5% more gold than it did three months ago and is worth roughly $900 million less. That is what a 14.1% fall in the underlying metal does, and it is the ordinary experience of owning a commodity rather than a flaw in the product. XAUt tracks gold, and gold fell.
Whether the reserve growth reads as conviction buying or as bargain hunting into a falling market is a matter of interpretation. What is not in doubt is that anyone who held XAUt through the quarter is down in dollar terms, regardless of how many ounces they added.
The Wider Tokenized Commodities Picture
The broader sector told the same story. According to RWA.xyz, the total value of distributed tokenized commodities fell 4.2% to $4.58 billion over the past 30 days, while the number of holders rose 6.5% to 253,000.
That holder figure covers the tokenized commodity sector as a whole rather than XAUt on its own, and Tether did not publish a separate holder count for its token. More people holding a smaller total pot is consistent with new entrants arriving at lower prices, which is the reading Tether favours, and it is also consistent with existing holders reducing exposure while new ones step in. The data does not separate the two.
Attestation, not audit
As with Tether’s stablecoin reserves, the XAUt figures come from an attestation rather than a full audit. An accounting firm confirms that figures provided by the company match its records at a point in time. It is not an examination of the business over a period, and Tether has published quarterly attestations for years while a promised full audit has not appeared.
For a product whose entire proposition is that tokens are backed one-for-one by bullion in a vault, that distinction is the one that matters most. The reserves may be exactly as described. The evidence for it is a snapshot the issuer assembles.
Shariah certification opens a new market
XAUt received Shariah certification from Amanah Advisors in July, which could expand access to the token among Islamic financial institutions that require compliance with Islamic finance principles before allocating to a product.
That is a genuine addition to the addressable market rather than a marketing line. Gold has a long-standing place in Islamic finance because it is a tangible asset rather than an interest-bearing instrument, so a certified tokenized version has an obvious route to institutions that cannot hold most crypto assets at all. No allocations from such institutions have been announced.
What it means for holders
The practical read is unchanged by any of this. XAUt is designed to track the gold price, and it did, downwards.
The case for holding it over physical gold or a gold ETF rests on portability and onchain accessibility rather than on returns, and those advantages are real for anyone who wants gold exposure that moves like a crypto asset. Recent data suggests few holders use it that way. A RedStone report published last week found that of roughly $4.2 billion in tokenized gold in circulation, only about $63 million was being used as collateral in decentralised finance, a utilisation rate of 1.5%.
Most tokenized gold, in other words, is sitting still. Which is what gold is generally bought to do.
