How do tokens like PAXG or XAUT even work?

Both these tokens claim that they are backed by gold, but the minimum redeemable amount is 430, or 1 bar of gold. This to me sounds quite fishy, as very few people actually have that much money to throw around.

However, say they're being honest. Do they not have a finite amount of gold that they have bought from places like the London Bullion market? How can they price it exactly at the price of gold when their own reserves are limited?

Maybe I just don't understand it, but I'd love for someone who has bought PAXG or XAUT to help me understand it better.