In the gold market, activity is changing as central bank purchases slow, demand from funds trading on exchanges is increasing, and gold-backed cryptocurrencies are increasing. The latter has recently moved to a high of three years, as measured by net mint volumes of precious metal-backed tokens.

According to data from RWA.xyz, more than $80 million tokens have been minted for the past month. The boost boosted the sector’s market capitalization by 6% to $1.43 billion. Meanwhile, monthly transfers increased 77% to $1.27 billion, marking a fierce revival of interest in digital representation of precious metals.

The increase in token activity reflects the broader trends in the gold market.

The latest report from the World Gold Council shows that total gold demand for the first quarter of the year reached 1,206 tonnes. This is a 1% increase from the previous year, with the first quarter being the strongest since 2016. Surges have occurred despite slowing central bank purchases, which fell from 365 tonnes in the fourth quarter.

Gold ETFs played a central role in the shift. Investment demand has more than doubled to 552 tonnes, suggesting that investors are moving to precious metals. This is a movement known historically by the central bank.

These inflows helped boost gold’s average quarterly price to a record of $2,860 per ounce, up 38% from the previous year. However, after rising 23.5% last week, prices fell 2.35% last week, while risk assets, including cryptocurrencies, have risen. Spot Gold is currently trading at $3,240.

Demand for traditional gold, such as jewelry, remained rising in China, particularly in recession (stomping at lows during the pandemic era) and demand for coins.

Read more: Tokenized gold spikes with market capitalization of over $2 billion due to fear of tariffs

Cryptocurrencies backed by gold have underperformed over the week as the price of the precious metal saw a significant drop after moving up more than 10% so far this year. The decline came as speculation surrounding Trump’s tariffs being a negotiating tool.

Gold-backed tokens, including Paxos gold (PAXG) and Tether gold (XAUT), have declined roughly 1% over the past week to trade around $2,900 while the wider crypto market rallied. The CoinDesk 20 Index rose 5.7% over the same period, and the broader MarketVector Digital Assets 100 Index (MVDA) rose 3.4%.

The precious metal saw its price drop amid growing speculation that the new tariffs threatened by U.S. President Donald Trump are meant to be a negotiating tool. This hit the price of safe-haven assets, including the commodity and the U.S. dollar.

Trump announced reciprocal tariffs were on the table to match the tariff imposed by other countries on U.S. imports. Reciprocal tariffs could take months to implement, leading to speculation these are meant to allow the U.S. to negotiate with other countries.

However, according to a recent Morgan Stanley report, gold’s recent dip could still present an “opportunity for those looking for hedges” amid global reflation, geopolitical tensions, and growing fiscal spending. Wall Street giants have recently raised their gold price forecasts, which would also help the price of gold-backed digital assets rise as these are backed by bullion stored in vaults.

Citi strategists recently raised their short-term gold price target to $3,000 and their average forecast for the year to $2,900. Meanwhile, UBS has hiked its 12-month gold target to $3,000 an ounce.

Major financial institutions have been raising their gold price forecasts as the precious metal’s price benefits from growing trade war fears and central banks’ accumulations.

This week, strategists at both Citi and UBS issued increased gold price forecasts, anticipating the precious metal’s bull run will continue as markets are pressured by geopolitical tensions and economic uncertainties.

Gold-backed cryptocurrencies have been benefiting from this trend, with tokens like PAXG and XAUT seeing performance in line with that of the precious metal. These tokens, backed by physical gold stored in vaults, have been outperforming the wider cryptocurrency market amid the uncertainty.

Citi has adjusted its short-term gold price target to $3,000 per ounce and increased its average forecast for the year to $2,900, up from $2,800, Investing.com reports. Behind its hike were not only the factors cited above but also global growth concerns expected to drive demand for the precious metal.

Meanwhile, UBS hiked its 12-month gold price target to $3,000 per ounce, up from $2,850. The precious metal has already breached the latter, currently trading at $2,860 after rising about 9% year-to-date.

UBS strategists led by Mark Haefele said in a note that gold’s “enduring appeal as a store of value and hedge against uncertainty has again proven itself.” Meanwhile, Citi’s note points to “trade wars and geopolitical tensions reinforcing the reserve diversification/de-dollarization trend and supporting emerging market (EM) official sector gold demand.”
Read more: Gold-Backed Cryptocurrencies Surge as Precious Metal Hits Record Amid Trade War Worry