Investment demand continues to be the main driver of the gold market. Analysts believe that in the context of rapidly developing digitalization, the impact of investment capital in gold on digital platforms is accelerating more strongly than traditional channels, including gold-guaranteed exchange-traded funds (ETFs).
Tether and the company's gold-guaranteed stablecoin – Tether Gold (XAUνι) – have been attracting great attention since the company announced its official gold holdings last month. According to analysts, the world's largest stablecoin issuing company currently owns about 125–150 tons of gold.
Tether is currently the largest physical gold buyer in the non-souveran bloc, and has entered the top 30 largest gold holding organizations globally, surpassing countries such as Australia, UAE, Qatar, South Korea and Greece," said Fahad Tariq, Senior Vice President of Stock Research at Jefferies, in a report on Monday.
Not only owning the world's largest tokenized gold coin, Tether also holds a significant amount of gold as a reserve asset to secure its USD-linked stablecoin. Currently, about 7% of the company's total assets are allocated to gold.
Last month, Tether CEO Paolo Ardoino said the company plans to increase its gold holdings to 10-15% in its investment portfolio.
Notably, Tether is not only competing with central banks. Commodity analysts at Société Générale (SocGen) said that if compared by gold holdings, XAUΟΛΟ will rank 8th among the largest gold ETFs globally – although in fact this is not an ETF, but a digital asset issuing organization.
According to analysis by the French bank, capital inflows into XAUΟΛΟ in December ranked second globally, only after SPDR Gold Shares (GLD) - the world's largest gold ETF fund.
SocGen also noted that Tether's capital flows are directly competing with speculative activities of hedge funds.
In the last week of January, cash flow from Tether became overwhelming and was a clear driving force dominating market developments at the end of the month, especially compared to ETFs.
However, overall, hedge funds are still the force dominating gold prices at the end of the month and early February. After a sharp price drop on Friday, March 30, Tether bought an additional 11 tons of gold, meaning'bottom-fishing'. This buying volume far exceeds ETFs, although it is still not comparable to the trading scale of hedge funds" - analysts said.
