Recent Trends in Gold-Backed Cryptocurrencies
In the past week, cryptocurrencies that are backed by gold have experienced a notable decline, coinciding with a drop in the price of the precious metal itself. After witnessing a price increase of over 10% earlier this year, gold’s recent downturn has raised concerns among investors. This decline is largely attributed to renewed speculation surrounding U.S. President Donald Trump’s proposed tariffs, which many believe may serve as a strategic negotiating tool.
Gold-backed tokens such as Paxos Gold (PAXG) and Tether Gold (XAUT) have seen their values decrease by approximately 1% over the week, trading around $2,900. In contrast, the broader cryptocurrency market has shown resilience, with the CoinDesk 20 Index climbing 5.7% during the same timeframe, while the MarketVector Digital Assets 100 Index (MVDA) rose by 3.4%.
The recent decline in gold prices can be linked to increasing speculation regarding reciprocal tariffs that President Trump has mentioned. These tariffs aim to match those imposed by other nations on U.S. imports and could take months to be enacted, leading analysts to believe they are primarily a means to facilitate negotiations with other countries.
Despite the current dip in gold prices, a recent report from Morgan Stanley suggests that this situation might present a valuable opportunity for investors seeking hedges against inflation and geopolitical uncertainties. As global reflationary pressures mount and fiscal spending increases, Wall Street analysts have begun to raise their gold price predictions, which could potentially boost the value of gold-backed digital assets.
For instance, Citi strategists have revised their short-term gold price target to an ambitious $3,000 per ounce, while also adjusting their average forecast for the year to $2,900. Similarly, UBS has elevated its 12-month gold target to match this optimistic outlook at $3,000 per ounce, suggesting a promising future for gold as a safe-haven asset.
