Tether Gold (XAUt) increased its physical gold reserves by 9.5% in the second quarter, even as the price of gold suffered its worst quarterly drop in 13 years. The token, which is backed by physical gold, now holds more bullion than ever, according to the company's latest attestation report. The move comes during a period when gold prices fell 14.1% in Q2 2026, a stark contrast to the reserve growth.
Gold's rough quarter
The precious metal had a brutal three months. Gold prices tumbled 14.1% in the second quarter, marking the worst performance since 2013. The decline was driven by a strengthening U.S. dollar and expectations of higher interest rates, which reduced demand for non-yielding assets like gold. Investors rotated into cash and bonds, leaving gold as one of the worst-performing major assets of the quarter.
Tether Gold's reserve growth
Despite that sell-off, Tether Gold's physical gold reserves increased by 9.5% during the same period. The company behind XAUt said the additional reserves were purchased to meet growing demand for the token. Each XAUt token represents ownership of one fine troy ounce of gold, stored in vaults in Switzerland. The increase means the token's backing is now larger than ever, even as the market value of that gold declined.
For holders of XAUt, the reserve growth is a sign that the token's issuer is committed to maintaining full backing. The token's price tracks the spot price of gold, so the recent drop in gold prices has also pulled XAUt lower. But the increase in physical reserves means the token's redemption value remains tied to actual bullion, not just a paper promise. The divergence between gold's price and Tether Gold's reserve accumulation is unusual — typically, falling prices discourage new purchases. But demand for the token appears to have held up, possibly from investors looking for a digital way to hold gold without dealing with physical storage.
The next quarterly report will show whether Tether Gold continues to add reserves if gold prices stay low. For now, the token's backing is at an all-time high, even as the asset it tracks sits near multi-year lows.
