Gold-Backed Cryptocurrencies Drop Amid Gold Price Decline

Gold-backed cryptocurrencies, including Paxos Gold (PAXG) and Tether Gold (XAUT), dropped about 1% in the past week to around $2,900 as gold prices fell sharply after gaining over 10% this year. Meanwhile, the broader crypto market surged, with the CoinDesk 20 Index rising 5.7% and the MarketVector Digital Assets 100 Index (MVDA) up 3.4%.

The decline in gold prices was driven by speculation that U.S. President Donald Trump’s proposed tariffs are a negotiating tactic. Trump announced reciprocal tariffs to match those imposed on U.S. imports by other countries, fueling uncertainty. Although these tariffs could take months to implement, the uncertainty impacted safe-haven assets like gold and the U.S. dollar.

Despite the drop, Morgan Stanley suggested that gold's dip presents a buying opportunity amid global economic reflation, geopolitical tensions, and increasing fiscal spending. Major financial institutions have recently raised their gold price forecasts, which could boost gold-backed digital assets. Citi increased its short-term gold price target to $3,000 and its annual average to $2,900, while UBS set a 12-month target at $3,000 per ounce. These bullish forecasts may lead to a rebound in gold-backed tokens, offering potential upside for investors seeking stable, asset-backed cryptocurrencies in volatile markets.