Gold-Backed Cryptos Lag as Gold Prices Drop Amid Trump’s Tariff Speculation
Gold-backed cryptocurrencies have seen a decline this week as the price of the precious metal dropped, despite a strong rally in the broader crypto market. The price of gold fell as speculation arose that U.S. President Donald Trump’s recently announced reciprocal tariffs may be more of a negotiation tactic than an immediate threat.
Tokens such as Paxos Gold (PAXG) and Tether Gold (XAUT) experienced a slight drop of about 1% over the past week, hovering around $2,900. This comes as the broader crypto market performed well, with the CoinDesk 20 Index gaining 5.7% and the MarketVector Digital Assets 100 Index (MVDA) rising 3.4%.
Gold’s price drop was fueled by growing assumptions that Trump’s proposed reciprocal tariffs, aimed at matching tariffs imposed on U.S. imports by other countries, are part of a longer-term negotiating strategy. While these tariffs could take months to implement, the uncertainty around them negatively impacted safe-haven assets, including gold and the U.S. dollar.
Despite the short-term dip, some analysts believe the pullback in gold prices presents an opportunity for investors seeking hedges amid rising global reflation, geopolitical tensions, and fiscal spending. A recent Morgan Stanley report suggested that gold-backed digital assets may benefit as the global economic environment continues to push up the demand for the precious metal.
Strategists at Citi have increased their short-term gold price target to $3,000 per ounce, with an average forecast of $2,900 for the year, while UBS raised its 12-month target to $3,000, potentially signaling a rebound for gold-backed crypto tokens as well.
