Does Tokenized Gold Extend Gold's Investment Utility? An Analysis on Benchmark Price Tracking and Intraday Price Dynamics

Abstract

This is a draft submitted for review to Journal of International Conference Proceedings (JICP). Abstract: While gold functions as a safe-haven asset, a hedging instrument, and a portfolio diversification tool within institutionally organized markets, tokenized gold extends these investment functions through transferability, tradability, and collateral ability as a blockchain-enabled digital asset traded on cryptocurrency exchanges. This structural difference raises the fundamental question of whether tokenized gold reliably represents gold despite being traded in a fragmented market environment. Using the LBMA Gold Price and COMEX gold futures as benchmarks, this study employs a quantitative-descriptive research design to examine Benchmark Price Tracking through Price Deviation, Mean Absolute Percentage Error (MAPE), and Root Mean Squared Error (RMSE) and Intraday Price Dynamics through Return Correlation and Volatility Difference. The results show limited price deviations and tracking errors against both benchmarks, accompanied by strong return correlations and small differences in return volatility. These findings provide preliminary evidence that tokenized gold reliably represents gold as its reference asset. This representational reliability supports the conclusion that tokenized gold extends gold’s investment utility through transferability, tradability, and collateral ability while remaining connected to the value and price movements of gold.