Inside Tether Gold: What Is XAUt Is and How to Stake It for Earning Yield?

Summary

• Tether Gold (XAUt) is a tokenized gold product where each token represents an undivided interest in one fine troy ounce bullion held by a custodian, with an allocated-style verification concept and strong divisibility.
• Unlike USDT, XAUt is a gold-backed token, designed to move with gold’s market price and has more real-world friction around redemption logistics.
• In 2025, XAUt price grew by 66% to around $4,350, while its market cap surged by over 240%, signaling rising demand for tokenized gold, not just higher gold prices. Gold’s rally throughout 2025 can be linked to macro drivers like institutional demand, rate-cut expectations, U.S. fiscal policy, and geopolitical risks. 
• Falcon Finance adds on-chain utility to Tether Gold by accepting XAUt tokens as collateral to mint USDf, then stake it into sUSDf. Falcon also offers the staking vault: you lock XAUt for a certain tenure in exchange for USDf-denominated weekly return (3-5% APR), paid weekly, while retaining ownership of the locked tokens.

Introduction

Gold has always been a “trust asset,” but owning it has usually meant dealing with physical friction: custody, storage, trading hours, and settlement delays. Tether Gold (XAUt) is one of the most established attempts to move bullion into a format that behaves like a crypto asset, while staying tied to real metal. This article will guide you through the intricacies of Tether Gold, its key benefits, utility, and the differences from a USD-pegged stablecoin from Tether, USDT.

What Is Tokenized Gold?

In short, tokenized gold is a blockchain-based token designed to give investors direct price exposure to vaulted, investment-grade physical gold held by a regulated issuer and professional custodian. In practice, the issuer stores bullions and mints tokens on blockchain networks such as Ethereum, or other chains, with each token pegged to a fixed unit of gold, for example, one troy ounce or one gram. The appeal of tokenized gold is not only “digital ownership” but usability: on-chain gold can move quickly, trade around the clock, and, crucially, be used as collateral or a base asset for yield strategies in crypto protocols instead of sitting idle in a vault.

How Tether Gold (XAUt) Works in Practice

At a high level, XAUt is Tether’s gold token. Each token is structured to represent an undivided interest in one fine troy ounce of gold associated with specific bullion bars that meet the LBMA “London Good Delivery” standard, held by a custodian on behalf of token holders.

Two design details matter for investors. First, XAUt is allocated-style in concept: Tether emphasizes that the physical gold backing XAUt can be tracked and verified, and describes a way for holders to check their gold allocation. Second, XAUt is divisible: while one token corresponds to one troy ounce, it can be split into very small fractions, which makes it easier to size positions precisely.

What You Own: Price Exposure vs. Physical Metal Rights

The “headline promise” of Tether Gold is simple: it tracks gold price because it is designed around gold reserves held in custody, with token issuance linked to bullion held for the system.

But it is still useful to separate three layers:

1. First, market exposure: XAUt will generally move with the market price of gold, so it is not price-stable in USD terms. 
2. Second, token mechanics: you can transfer XAUt like other tokens and hold fractional amounts. 
3. Third, redemption rails and terms: redeeming for physical gold is typically more restrictive than trading the token, and the issuer’s onboarding and terms matter.

How Is XAUt Different from USDT?

Because both products come from Tether, it’s tempting to treat them as variations of the same thing, although they are quite distinctive. XAUt is a gold-linked commodity token, and USDT is a dollar-pegged stablecoin designed to stay close to $1. Below are the detailed differences between XAUt and USDT.

1. Price. USDT is meant to minimize price volatility by referencing the U.S. dollar. XAUt is meant to reflect the value of gold, which can rise and fall versus USD. That difference changes how you use them: USDT is typically “cash-like” for trading, payments, and treasury management, while XAUt is closer to a portable gold position that happens to live on-chain.
2. Backing. XAUt is designed around gold bullion bars held in custody, with the token representing a defined gold unit and an allocation-verification concept. USDT, by contrast, is backed by a broader reserve portfolio and is designed primarily as a stable settlement asset. 
3. Redemption. USDT redemptions are fundamentally about converting a token back into dollars through issuer processes. XAUt redemptions are fundamentally about converting a token position into gold exposure in the real world, where bar sizes, logistics, and custody constraints naturally introduce more friction than a fiat redemption.
4. Risks. Both instruments carry issuer and operational risk. However, the shape of the risk differs. With XAUt, the core questions are custody, allocation and attestation practices, and the legal and operational pathway between a token and physical gold. With USDT, the core questions center more on reserve quality, transparency, and liquidity under stress.

Tether Gold Performance in 2025

Across 2025, XAUt’s price trended steadily higher, rising from about $2,620 on January 1, 2025 to almost $4,350 at the time of writing (December 20, 2025), i.e. it gained roughly +66%.

Over the same period, XAUt’s market cap expanded much more aggressively, growing from $647 million on January 1 to almost $2.27 billion on December 20, 2025. That’s an increase of about $1.61 billion, or about 249%.

Why Gold Rallied in 2025

Gold’s 2025 rally was not a narrative trade as much as a macro response, expressed in a set of drivers by the end of the year: higher institutional demand, expectations for further rate cuts that bring lower real yields, U.S. fiscal deficit and the weak-dollar policy by Donald Trump, alongside persistent geopolitical risks.

Data from the World Gold Council (WGC) adds a key detail about who was buying: investors returned in size via ETFs and physical investment, while central banks continued to accumulate at levels that remain well above the pre-2022 norm. In Q3 2025 alone, the WGC recorded an increase of 222 tonnes of ETF inflows and 220 tonnes of net central bank purchases, keeping overall demand elevated even as higher prices pressured jewelry demand.

Because gold became a desirable “safe harbour” from potential economic shocks in 2025, a gold-backed token such as XAUt largely followed. At the same time, Tether Gold’s market cap grew much faster than the price, also reflecting an increasing demand specifically for the tokenized form of gold.

In other words, XAUt benefits from gold’s role as a hedge in traditional portfolios, and from the practical appeal of holding that hedge in a format that is transferable 24/7 and easier to deploy inside digital asset markets.

How to Earn Yield on Tether Gold

Falcon Finance integrated Tether Gold into its product, bringing additional utility for this token.

First, XAUt can be used as collateral to mint USDf, Falcon’s synthetic dollar, effectively turning tokenized gold into on-chain liquidity. From there, USDf can be staked into sUSDf, the yield-bearing form of USDf, so you keep gold exposure via the underlying collateral, while the yield comes from Falcon’s strategies on the stable side of the balance sheet.

For users who prefer to keep their gold-backed tokens, Falcon also introduced a Tether Gold staking vault. The way it works is straightforward: lock XAUt for 180 days and earn a USDf-denominated return paid weekly, with a 3-5% APR. The important detail is that you remain the owner of tokens locked in the Falcon vault, while earning a stablecoin yield stream on top.