Gold price returns to $3,300, Tether gold stablecoin XAUT will be launched on TON

Gold has been hovering at high levels since reaching a historical high of over $3,500 per ounce in April. It has risen 28% year-to-date, making it one of the best-performing assets this year. The stablecoin protocol USDT0 will launch XAUT0 on TON, a token based on Tether Gold stablecoin XAUT, allowing cryptocurrency investors to easily invest in gold. The investment amount can be smaller, and with no custody fees, it provides another channel for gold investment. The stablecoin issuer Tether's USDT0 protocol, launched this year, is a new cross-chain stablecoin solution. This new stablecoin aims to enhance USDT's interoperability across multiple blockchain networks, allowing users to seamlessly transfer USDT between different chains. USDT0 uses LayerZero's OFT (Omnichain Fungible Token) standard, ensuring each USDT0 token is 1:1 backed by USDT on Ethereum. It is currently used on ten blockchains, including Arbitrum, Optimism, and Kraken's Ink. Since its launch this year, the token's circulating supply has surged to $1.3 billion. According to CoinDesk, the stablecoin protocol USDT0 plans to launch XAUT0, a token based on Tether Gold (XAUT) and compatible with decentralized finance applications. The gold token will first be launched on TON and is planned to be more widely promoted to other DeFi-oriented blockchains in the third quarter to meet the growing demand for real-world assets (RWA). Tether's gold stablecoin XAU₮ has each token backed 1:1 by a troy ounce of physical gold, securely stored in dedicated vaults at world-class facilities in Switzerland. According to its latest website data, Tether owns 7.7 tons of gold, with a market value of approximately $830 million. Due to a weakening US dollar and increased hedging demand from tariff and geopolitical risks, gold has performed impressively this year. Gold has remained at high levels since reaching a historical high of over $3,500 per ounce in April, rising 28% year-to-date. Goldman Sachs stated last week that gold will continue to be an inflation hedge in long-term investment portfolios. Stablecoin issuers Paxos' PAXG and Tether's XAU₮ can be directly purchased through centralized exchanges or DeFi, allowing cryptocurrency investors to easily invest in gold. The investment amount can be smaller, and with no custody fees, it provides another channel for gold investment. Risk Warning: Cryptocurrency investments carry high risks, with potentially volatile prices. You may lose all your principal. Please carefully assess the risks. In May, China's manufacturing activity unexpectedly experienced a sharp decline. According to the latest S&P Global Manufacturing PMI report, the data dropped to 48.3, the largest decline since September 2022, breaking the streak of expansion in previous months. This highlights the pressure from weak exports and insufficient domestic demand on the Chinese economy, raising market expectations for further policy stimulus.

Toggle

PMI Significantly Below Expectations, Manufacturing Sector Returns to Contraction Zone

Caixin/S&P Global PMI in May recorded 48.3, far lower than Reuters' estimated 50.6, and fell below the 50 breakeven line for the first time since September 2023, indicating an overall contraction in manufacturing activity. This survey, focused on a mid-month investigation, covered over 500 export-oriented enterprises, reflecting an accelerating decline in export orders.

Official PMI Slightly Increases, But Still Not Escaping Contraction

Meanwhile, China's official manufacturing PMI in May was 49.5, slightly up from April's 49, but still in the contraction zone for the second consecutive month. However, this data is more synchronized with industrial output performance, covering about 3,000 enterprises, suggesting that officials are slightly optimistic about the manufacturing sector's prospects, though substantial improvement remains to be seen.

Service Sector Remains Stable, Non-Manufacturing PMI Still Above Breakeven Line

According to LSEG data, China's official non-manufacturing PMI in May was 50.3, similar to April's 50.4, indicating that service and construction industries, while slowing, remain in a moderate expansion state. The market is currently waiting for the Caixin service sector PMI to be released later this week to further interpret the overall economic direction.

China-US Trade Tensions Unresolved, Tariff Adjustments Bring Uncertainty

Although US President Trump announced a 90-day postponement of the 145% high tariffs on China after the mid-month high-level trade talks, most tariffs have been in effect since April. According to the Peterson International Economics Institute, the current tariffs on goods between China and the US are 51.1% and 32.6% respectively, still at high levels, posing challenges for export enterprises.

Industrial Output and Export Performance Diverge, Corporate Profits Improve

In April, China's industrial output grew by 6.1% year-on-year, lower than March's 7.7%; however, export performance was relatively strong, growing by 8.1%, exceeding market expectations. While exports to the US declined, exports to Southeast Asian countries increased, providing some support. Industrial enterprise profits also increased for the second consecutive month, indicating that current policies have been somewhat effective in alleviating corporate funding pressures.

Policy Stimulus Frequently Introduced, Central Bank Lowers Interest Rates and Reserve Ratio to Boost Liquidity

To address economic pressure, the People's Bank of China again lowered the main interest rate by 10 basis points in May and reduced the deposit reserve ratio (RRR) by 50 basis points to release liquidity and boost market confidence. The government has also simultaneously introduced multiple measures to stimulate domestic demand, stabilize employment, and help enterprises impacted by tariffs.

Domestic Demand Weakness Continues, Real Estate and Consumption Remain Major Drag

Despite the government's continued policy support, domestic demand remains weak. In April, retail sales grew by only 5.1%, below expectations; industrial goods wholesale prices have been declining for six consecutive months, and consumer prices have also been declining for three consecutive months. Real estate-related investment decreased by 10.3% year-on-year (from January to April), reflecting that the weak property market remains a major obstacle to economic recovery.

The Road to Economic Recovery Remains Long, Market Anticipates More Actions

Under the triple pressure of weak external demand, insufficient domestic demand, and deflationary pressures, the Chinese economy shows signs of unstable recovery. The market generally believes that if the economic data in the second quarter does not show significant improvement, Beijing authorities may need to further expand fiscal expenditure, increase infrastructure investment, or consider more intense stimulus measures such as tax cuts and fee reductions.