Gold continues to hit new highs, with the market cap of gold-backed stablecoins reaching 1.1 billion USD.

Driven by loose monetary policies from central banks and geopolitical issues, gold has hit a historical high for the fourth consecutive day. It has risen by nearly 30% so far this year, making it one of the best-performing assets of the year. Funds continue to flow into gold ETFs, and the market value of gold stablecoins has also exceeded $1.1 billion.

Loose Monetary Policy and Geopolitical Risks Drive Gold Prices Up

In 2024, gold prices have risen by over 28%, attributed to loose central bank policies and geopolitical issues. As gold does not yield interest on its own, the lower interest rate environment has increased the attractiveness of non-yielding gold.

The Federal Reserve initiated this rate cut cycle by cutting rates by 0.5% on 9/18, driving gold prices to record highs. According to the CME FedWatch tool, investors anticipate a 62% possibility of another 0.5% rate cut in November. Traders are awaiting comments from Fed Chair Powell on 9/26 and later U.S. inflation data for further policy clues.

According to CNBC, Phillip Streible, Chief Market Strategist at Blue Line Futures, stated:

"If we continue to see weak labor and the Fed Chair hints at a potential 0.5% rate cut, we could see gold at $2,700 per ounce in the next day or two."

Funds Continue to Flow into Gold ETFs, Gold-backed Stablecoins Market Value Exceeds $1.1 Billion

According to the latest report from the World Gold Council (WGC), global gold ETFs have seen continuous fund inflows for four months, with positive flows recorded in all regions led by Western funds. The strength in gold prices and recent fund inflows have increased global assets under management by 20% year-to-date, reaching a new month-end high of $257 billion.

Tokenized gold is another channel for investing in gold, similar to stablecoins, where its price is linked to gold, providing investors with an alternative way to invest in gold without paying ETF management fees or bearing the storage costs and carrying risks of physical gold bars. The largest issuers of tokenized gold currently are stablecoin issuers Paxos and Tether.

The Total Value Locked (TVL) of Tether Gold XAU₮ recently reached a historical high of $650 million, while Paxos' PAXG reached $500 million, bringing the market value of gold-backed stablecoins to $1.15 billion.

With gold prices nearing historical highs, what are the channels for investing in gold? And what are gold-backed stablecoins?