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Tokenized Gold in Crypto Markets: Tracking Accuracy and Portfolio Performance
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DOI：10.3390/fintech5010019.png)
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Abstract
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This paper examines the relationship between traditional gold (XAU) and its tokenized counterparts (PAXG and XAUT), providing an empirical assessment of how digital representations of real-world assets align with their underlying benchmarks. Using multi-year time series data, the study evaluates price deviations, tracking accuracy, correlations, and volatility across both weekday-only and 24/7 trading datasets, incorporating weekend effects and crypto-market microstructure. Results show that both tokenized assets exhibit strong long-term alignment with XAU, while short-term divergences arise from continuous crypto trading, liquidity fragmentation, and issuer-specific design features, with XAUT consistently tracking spot gold more closely than PAXG. Building on this analysis, the paper examines the role of tokenized gold within dynamic, smart contract-driven crypto portfolios that also include BTC, ETH, and cash. Portfolio simulations demonstrate that adaptive rebalancing strategies materially improve risk-adjusted performance, with XAUT serving as a stabilizing anchor and cash enabling rapid, automated repositioning during volatility spikes. The findings offer a dual contribution: they clarify the fidelity and market behavior of tokenized gold and provide evidence of its practical utility within automated, on-chain portfolio management, highlighting both its strengths and structural limitations in emerging digital financial systems.
Keywords:
blockchain technology
digital finance
asset tokenization
market microstructure
portfolio allocation
financial innovation
alternative investments
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