How Tokenizing Precious Metals Like Gold on Hedera Can Boost Digital XAU

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Precious metals such as gold hold a unique status as a hedge against inflation and a globally trusted store of value.

Despite this, gold markets can be fragmented and inefficient. Physical gold requires storage and insurance, while trading often involves lengthy settlement times with limited accessibility.

A new proposition is being put forward with distributed ledger technologies, breaking down legacy barriers for gold inflows by tokenizing gold in a new way.

By tokenizing gold on platforms like Hedera Hashgraph, institutions and retail investors alike can access fractional, transparent, and instantly transferable representations of gold.

Why Gold Is Ripe for Tokenization

The global gold market is worth over $13 trillion, yet liquidity is concentrated in futures and other stocks that do not provide wholly true ownership of the underlying gold asset.

Tokenization can solve such problems by creating digital tokens backed by physical gold reserves, enabling investors to gain verifiable ownership without the inefficiencies of traditional custody.

Fractionalization is another driver. Through tokenization on Hedera, small investors can acquire fractions of gold, making gold more inclusive and accessible to global participants.

This democratization of access can expand inflows for gold and introduce new avenues for capital beyond traditional investors and funds.

Why Does Hedera Stand Out In Gold Tokenization?

Hedera’s architecture provides unique advantages for tokenizing precious metals like gold and silver:

The above features make Hedera a purpose-built ecosystem for real-world assets where reliability, trust, and compliance are at the forefront.

Increased Liquidity and Market Efficiency for Gold

Tokenizing gold on Hedera can create investment opportunities within the realm of 24/7 global liquidity. Unlike traditional gold markets that operate during limited hours, gold tokens can be traded peer-to-peer at any time.

The tokenization of precious metals opens the door to entirely new markets, from decentralized exchanges to cross-border settlement solutions, enabling capital to flow more freely into gold.

Integration With Crypto DeFi

Tokenized gold becomes more powerful when integrated into decentralized finance (DeFi) ecosystems. On Hedera, gold-backed tokens could be used as collateral for lending, yield generation, or stablecoin issuance.

Algorand and XRPL in precious metals tokenization via Meld Gold

Silver has been tokenized on Algorand and the XRP Ledger with Meld Gold, who have also worked on tokenizing gold on both networks with the potential to launch acsess to additional precious metal assets.

Compliance and Institutional Adoption of Digital Gold

Enterprises and regulators are cautious when it comes to precious metals due to their legacy standing. Hedera’s design provides a compliance framework that can support institutional adoption at scale.

Features like transparent audit trails, verifiable proof of reserves for precious metal holdings and identity-enabled transactions ensure that tokenized gold projects can meet strict regulatory standards.

A Catalyst for Broader RWA Tokenization

Gold may be the starting point, but its tokenization on Hedera can act as a catalyst for other real-world assets in the precious metals genre, such as silver.

Precious metals like silver, platinum, and palladium could follow, alongside commodities such as oil and agricultural goods. The success of gold tokenization could validate Hedera’s infrastructure for RWAs broadly, attracting greater enterprise participation.

Tether’s Tether Gold (XAU₮) token represents “a 1:1 basis of one fine troy ounce of gold on a physical bar of gold” while managing to meet the Good Delivery standard of the London Bullion Market Association.

Tether Gold allows users to redeem their tokens for real gold or USD value, with Tether’s vaults currently being backed by 900+ gold bars at a $1,3B market capitalization as of September 2025.

London’s bullion market is set to digitize its gold reserves worth $900 billion. Within the same timeframe of the announcement, XAU stocks reached new all-time highs of $3,600.

“We are trying to standardise that digital layer of gold, such that the various financial products used in other markets can be used in the gold market going forward,” said Tait, a former banker. “My goal is that many asset managers around the world will suddenly look at it differently.”

Tokenizing gold on Hedera Hashgraph would be a monumental step forward for both the precious metals market and the blockchain industry.

As institutional and retail investors seek stability in uncertain markets, tokenized gold on Hedera could become a cornerstone of tokenized finance. In the process, it may not only reshape the future of gold investment but also establish Hedera as the trusted platform for the next wave of asset tokenization.