Tether Gold (XAUT) is a token issued by TG Commodities Limited, part of the Tether group best known for the USDT stablecoin, where each token represents ownership of one troy ounce of physical gold held in a Swiss vault operated by Tether's custodian. Launched in 2020, XAUT sits in the tokenised commodities category rather than the stablecoin category proper — its value tracks the spot gold price, not a fixed dollar peg, so it moves up and down with bullion markets.
What it does
Each XAUT token is backed by a specific, serial-numbered gold bar that Tether says is allocated and unencumbered, meaning it isn't leased, loaned or pledged elsewhere. Holders with a sufficient balance can request physical redemption of the underlying gold, or redeem for cash value, subject to Tether's fees and verification process. The token trades on Ethereum and other chains, letting holders move gold exposure with the speed of a crypto transfer rather than the logistics of a bullion vault transfer.
The pitch for XAUT is combining gold's traditional role as an inflation hedge and portfolio diversifier with crypto's 24/7 liquidity, self-custody options and composability with DeFi protocols that accept it as collateral. It competes with Paxos Gold (PAXG) as one of the two dominant tokenised-gold products.
Risks
XAUT's central risk is the same as any tokenised real-world asset: holders are trusting Tether's custodial and audit claims about vault contents, and Tether has a well-documented history of opacity around its reserves for USDT, which invites reasonable scepticism about how rigorously XAUT's backing is verified versus simply attested.
Redemption for physical gold involves minimum thresholds, fees and identity checks that make it impractical for small holders, meaning most XAUT trading is really a bet on gold's spot price plus counterparty trust in Tether, not a genuine path to holding metal. It's also exposed to gold market dynamics themselves — rate expectations, dollar strength, central bank buying — that have nothing to do with crypto and can move independently of the rest of a holder's portfolio.