In the gold market, activity is changing as central bank purchases slow, demand from funds trading on exchanges is increasing, and gold-backed cryptocurrencies are increasing. The latter has recently moved to a high of three years, as measured by net mint volumes of precious metal-backed tokens.
According to data from RWA.xyz, more than $80 million tokens have been minted for the past month. The boost boosted the sector’s market capitalization by 6% to $1.43 billion. Meanwhile, monthly transfers increased 77% to $1.27 billion, marking a fierce revival of interest in digital representation of precious metals.
The increase in token activity reflects the broader trends in the gold market.
The latest report from the World Gold Council shows that total gold demand for the first quarter of the year reached 1,206 tonnes. This is a 1% increase from the previous year, with the first quarter being the strongest since 2016. Surges have occurred despite slowing central bank purchases, which fell from 365 tonnes in the fourth quarter.
Gold ETFs played a central role in the shift. Investment demand has more than doubled to 552 tonnes, suggesting that investors are moving to precious metals. This is a movement known historically by the central bank.
These inflows helped boost gold’s average quarterly price to a record of $2,860 per ounce, up 38% from the previous year. However, after rising 23.5% last week, prices fell 2.35% last week, while risk assets, including cryptocurrencies, have risen. Spot Gold is currently trading at $3,240.
Demand for traditional gold, such as jewelry, remained rising in China, particularly in recession (stomping at lows during the pandemic era) and demand for coins.
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