Tether Gold (XAU₮) is a tokenized asset backed by physical gold and issued by TG Commodities, S.A. de C.V., a company within the Tether ecosystem. One full XAU₮ token represents one fine troy ounce of gold contained in a London Good Delivery bar. The physical metal is stored in Switzerland, while the token enables holders to transfer economic exposure to gold through blockchain infrastructure without moving the underlying bullion. By mid-2026, XAU₮ had become one of the largest products in the tokenized gold segment, combining a traditional precious metal with digital asset infrastructure.
Contents
- What Is Tether Gold XAU₮ and How Is It Linked to Physical Gold?
- How Gold Tokenization and XAU₮ Backing Work
- Buying, Holding and Redeeming Tether Gold
- Blockchains, Use Cases and the Tokenized Gold Market
- Risks and Prospects of Tether Gold XAU₮
1. What Is Tether Gold XAU₮ and How Is It Linked to Physical Gold?
Tether Gold was launched in 2020 as a digital form of ownership linked to physical gold. Unlike stablecoins pegged to the US dollar or euro, the value of XAU₮ is tied to the market price of gold. One full token represents one fine troy ounce of the metal, equivalent to approximately 31.1 grams of pure gold contained in a specific bar.
The reserves consist of gold bars that meet the London Good Delivery standard used in the international wholesale bullion market. Physical gold allocated to the tokens is held by a custodian in Switzerland. The bars have identifiable characteristics, including serial numbers, weight and purity.
XAU₮ is not issued by the same entity that issues USDT, but by a separate company, TG Commodities, S.A. de C.V. The company is registered in El Salvador and operates as a registered stablecoin issuer and digital asset service provider under the country's Digital Asset Issuance Law. This distinction is important when evaluating XAU₮ because holders receive a blockchain token whose associated rights are governed by the issuer's terms and applicable legislation.
In June 2026, physical reserves totaled 707,747.139 fine troy ounces of gold, while 707,747.09 XAU₮ were in circulation. Based on the gold price of $4,008.02 per ounce used in the quarterly report, these reserves were valued at approximately $2.84 billion. Reserve holdings and the number of issued tokens are disclosed through periodic reports.
2. How Gold Tokenization and XAU₮ Backing Work
The XAU₮ model differs from synthetic tokens that merely track the market price of gold through derivatives or algorithmic mechanisms. Tether Gold is backed by physical metal. Each full XAU₮ is associated with one fine troy ounce of gold contained in a specific London Good Delivery bar, while fractional tokens represent corresponding fractions of that gold.
When new tokens are purchased, the issuer allocates physical gold to holder addresses according to its allocation system. Because a standard gold bar contains hundreds of troy ounces, an individual holder may own a fraction of a bar, while a larger token balance may be associated with several different bars.
- Physical backing. Each full XAU₮ is backed by at least one fine troy ounce of physical gold.
- London Good Delivery. The reserves use bars that comply with standards recognized by the international bullion market.
- Storage in Switzerland. The physical metal is held within specialized custodial infrastructure.
- Bar identification. The gold bars have serial numbers and documented weight and purity data.
- Fractional ownership. Blockchain tokens make it possible to transfer fractional exposure to gold without physically dividing a bar.
- No regular yield. XAU₮ itself does not pay interest or dividends; its financial performance primarily depends on the price of gold.
Tether publishes quarterly reports covering XAU₮ reserves. Independent assurance reports regarding the stated reserves are prepared by an external accounting firm. Their purpose is to verify, as of the reporting date, the relationship between the amount of physical gold and the number of tokens in circulation. Such verification, however, does not make XAU₮ equivalent to a bank deposit or eliminate custodial and legal risks.
The secondary-market price of XAU₮ may not always correspond exactly to the spot value of one ounce of gold. Differences can arise from liquidity on a particular trading platform, market demand, fees, blockchain transaction costs and the availability of arbitrage between primary and secondary markets.
3. Buying, Holding and Redeeming Tether Gold
XAU₮ can be obtained directly through Tether Gold infrastructure, subject to the issuer's requirements, or purchased through cryptocurrency platforms that support the token. Direct purchases and redemptions require identity verification and are governed by the applicable Terms of Service, including jurisdictional restrictions, minimum transaction sizes and fees.
One important difference between tokenized gold and a physical gold coin is the ability to transfer fractional amounts through a blockchain. Users do not need to transport the underlying metal or update records in a traditional depository system for every transaction. Physical redemption works differently, however: to receive bullion, a holder must own enough XAU₮ to redeem an entire London Good Delivery bar.
| Parameter | Tether Gold XAU₮ |
|---|---|
| Asset type | Tokenized physical gold |
| Issuer | TG Commodities, S.A. de C.V. |
| Backing | Physical gold bars |
| Backing per 1 XAU₮ | One fine troy ounce of gold |
| Gold bar standard | London Good Delivery |
| Storage location | Switzerland |
| Main networks | Ethereum, TRON and BNB Chain |
| Physical redemption | Whole gold bars, subject to the issuer's conditions |
| Regular interest | None at the XAU₮ token level |
| Issuer's regulatory framework | El Salvador's Digital Asset Issuance Law |
London Good Delivery bars do not have exactly identical weights. Tether Gold therefore recommends holding approximately 430 XAU₮ to initiate physical redemption, after which the exact token amount is adjusted according to the actual weight and purity of the allocated bar. Redemption is calculated at a ratio of one XAU₮ per one fine troy ounce of gold.
The terms also allow redemption to be delayed under certain circumstances, such as reserve unavailability or legal requirements. Physical backing therefore does not mean that any holder can receive gold immediately on demand. The process depends on KYC requirements, minimum redemption amounts, logistics and the issuer's applicable terms.
4. Blockchains, Use Cases and the Tokenized Gold Market
XAU₮ initially gained adoption as an ERC-20 token on Ethereum and a TRC-20 asset on TRON. In 2026, Tether also announced the availability of Tether Gold on BNB Chain, expanding access to the token within another major blockchain ecosystem. Multi-network support allows exposure to the same underlying economic asset across different segments of cryptocurrency infrastructure.
The main advantage of tokenization is not that it changes the characteristics of gold itself, but that it changes how economic ownership can be transferred. The physical bar remains in custody, while the digital representation of the corresponding share can move between blockchain addresses. This enables 24/7 transfers and integration with compatible digital services.
XAU₮ can be used to gain exposure to gold, as a digital settlement asset or as collateral in certain blockchain applications. In February 2026, Elemental Royalty Corporation also gave shareholders the option to receive dividends in XAU₮, demonstrating one possible integration of tokenized gold with traditional corporate financial processes.
The product's regulatory presence has also expanded. In July 2026, XAU₮ was recognized as an Accepted Spot Commodity in the Abu Dhabi Global Market, allowing authorized ADGM firms to work with the asset subject to the relevant permissions. During the same month, XAU₮ received Shariah-compliance certification from Amanah Advisors, potentially expanding the use cases for tokenized gold within Islamic finance.
5. Risks and Prospects of Tether Gold XAU₮
The primary market risk of XAU₮ is linked to the price of gold. The token does not maintain a fixed US dollar value and can appreciate or decline together with the underlying metal. For example, gold prices fell by 14.1% in the second quarter of 2026, even as the amount of XAU₮ held by users continued to increase.
Additional risks relate to the issuer and custodian, redemption conditions, smart contracts, blockchain fees, market liquidity and regulation. Physical redemption is also primarily suited to larger holdings because it involves receiving an entire London Good Delivery bar.
At the same time, tokenization simplifies some aspects of gold ownership. Fractional amounts can be transferred without physically transporting bullion, while blockchain infrastructure enables transactions around the clock. This combination of real-world backing and digital transferability makes XAU₮ an example of the Real World Assets, or RWA, sector.
Tether Gold should be viewed as a digital form of economic ownership linked to physical gold, but one that introduces additional infrastructure-related risks. The increase in reserves to more than 707,000 fine troy ounces by mid-2026 demonstrates the growing scale of the product, while its future development will depend on demand for tokenized RWAs, liquidity, regulation and the reliability of the system connecting digital tokens with physical gold.
