Chief Investment Officer Iggy Ioppe of Theo pointed out that once the US futures market closes over the weekend, the public pricing of gold shifts to the blockchain network. Chicago Mercantile Exchange (CME) gold futures cease trading at 5 PM Eastern Time on Friday and resume at 6 PM Sunday, creating nearly a 49-hour “gold pricing gap,” making tokenized gold assets PAXG and XAUt the new global tracking assets.
CME Gold Futures Weekend Closure and Pricing Gap
(Source: CEX.IO)
Ioppe stated, “In terms of publicly visible price discovery, on-chain markets are almost 100% responsible for weekend gold price discovery.” After CME futures reopen, prices tend to align closely with the trends established on the blockchain markets over the weekend.
During CME’s closure, although OTC trading in Asia continues, these transactions are not publicly disclosed, lacking transparency. In contrast, all transactions of tokenized gold are visible on-chain in real-time, making it the only public channel for institutions to track weekend gold price movements.
This weekend’s Middle East crisis is a prime example. As the US and Israel launched military strikes on Iran, tokenized gold prices surged significantly: XAUT briefly broke above $5,450, and PAXG approached $5,536, while Bitcoin declined, demonstrating the independent safe-haven function of tokenized gold amid geopolitical crises.
Advantages and Use Cases of Tokenized Gold’s Weekend Pricing
Unique Public Pricing: During CME weekend closures, PAXG and XAUt nearly monopolize the public gold price discovery function.
Institutional Signal Tracking: Macro and cross-asset trading desks monitor on-chain markets to track gap risks before CME reopens.
Real-Time Rebalancing: Traders can immediately adjust positions during geopolitical events when traditional markets are closed.
Arbitrage-Driven Liquidity: Market makers maintain pricing efficiency by arbitraging price differences between digital and traditional markets.
Explosive Growth and Future Outlook of the Tokenized Gold Market
The market cap of tokenized gold grew from about $1.6 billion to $4.4 billion over the past year, an increase of 177%, far surpassing the overall gold market growth and most major physical gold ETFs. The number of holders nearly tripled, adding over 115,000 wallets, accounting for about a quarter of net inflows in the RWA sector, exceeding the combined growth of tokenized stocks, corporate bonds, and non-US government bonds.
In terms of trading volume, tokenized gold is projected to reach approximately $178 billion by 2025, with a peak of over $126 billion in Q4, making it the second-largest gold investment product globally, after SPDR Gold Trust.
However, Ioppe noted that there are still obstacles: liquidity for tokenized gold remains below that of futures or ETFs, making large transactions difficult; regulatory frameworks vary significantly across jurisdictions, hindering large-scale institutional adoption. He expects the tokenized market and traditional markets to coexist, each serving different functions.
Frequently Asked Questions
Q: Why is tokenized gold important during CME weekend closures?
CME gold futures are closed for nearly 49 hours over the weekend. During this period, Asian OTC trading continues but is not publicly disclosed. Tokenized gold (PAXG, XAUt) is among the few assets that continue trading and are publicly visible, thus nearly 100% responsible for weekend gold price discovery.
Q: How fast has the market cap of tokenized gold grown?
Over the past year, the market cap surged from about $1.6 billion to $4.4 billion, an increase of 177%, far exceeding most major gold ETFs’ growth during the same period. The number of holders nearly tripled, adding over 115,000 wallets, making it one of the largest growth engines in the RWA sector.
Q: What are the main challenges facing tokenized gold?
Major challenges include: liquidity still below that of traditional futures and ETFs, making large trades difficult; significant regulatory differences across jurisdictions; and disparities in custody, accounting, and capital rules worldwide, hindering large-scale institutional deployment.
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