Abstract：Headlines about central banks flying their gold home are often read as a verdict on the U.S. dollar. A Federal Reserve research note published on November 9 argues that reading is too simple: for the euro area central banks that moved gold out of U.S. custody, the dollar's share of their reserves barely moved. According to the Federal Reserve, the note reviews relocations by Germany, the Netherlands and France since 2013 and the changes, or lack of them, in their U.S. dollar reserve allocations.
Headlines about central banks flying their gold home are often read as a verdict on the U.S. dollar. A Federal Reserve research note published on November 9 argues that reading is too simple: for the euro area central banks that moved gold out of U.S. custody, the dollar's share of their reserves barely moved. According to the Federal Reserve, the note reviews relocations by Germany, the Netherlands and France since 2013 and the changes, or lack of them, in their U.S. dollar reserve allocations.
The note, titled “Gold Reserve Relocations: Are They Always Bad News for U.S. Dollar Reserves?”, is a FEDS Note by Colin Weiss, identified by Kitco News as Principal Economist for Global Financial Flows at the Federal Reserve. FEDS Notes carry the author's own views and analysis and are shorter and less technical than the Fed's working papers. The note states that the views expressed are solely the author's and do not reflect those of the Board of Governors or anyone else in the Federal Reserve System.
ContentsWhy Gold's Storage Location Matters
For a beginner in foreign exchange, the key idea is that reserves are the assets a central bank holds to back its currency and meet obligations abroad. They usually sit in foreign currency assets, mainly U.S. dollars, and sometimes in gold. Where that gold is physically stored can matter because gold held in another country's vaults can, in principle, be frozen or blocked by that country's authorities.
Weiss writes that one appeal of gold as a reserve asset is that it can be used to evade financial sanctions and asset seizures imposed by foreign governments, unlike foreign currency assets. For that to work, the gold cannot be custodied in the country of the sanctioning government. In practice, this has meant central banks worried about sanctions keep gold in domestic vaults.
He offers two examples. Russia holds its gold reserves domestically, having stockpiled gold and cut dollar holdings during the 2010s amid concerns about U.S. financial sanctions. Turkey repatriated gold held in the U.S. and the U.K. in 2018 and also sharply cut the dollar share of its reserves, during a period of geopolitical tension with the U.S. that included President Recep Tayyip Erdoğan's criticism of the dollar's international role.
The note also points to cases where custody became a practical problem. Venezuela has not been able to access gold reserves held at the Bank of England since 2019 because the British government does not recognise the legitimacy of Nicolás Maduro and his government. The U.S. Treasury has also announced sanctions targeting anyone, wherever located, operating in the gold sector of Iran's economy.
What the Euro Area Cases Actually Show
Germany shifted about one-fifth of its U.S.-held gold to domestic vaults between 2013 and 2017, according to the Bundesbank. Its dollar share of foreign exchange reserves stayed around 90 percent during that period and currently exceeds 80 percent, well above the dollar's overall share of global reserves in the International Monetary Fund's COFER data, which tracks the currency composition of official reserves.
The Netherlands repatriated about two-fifths of its U.S.-custodied gold in 2014, with little change to the 83 percent dollar share of its reserves. That share did dip to nearly 50 percent in 2018, but Weiss says the large decline proved short-lived. De Nederlandsche Bank actively manages currency risk on its foreign currency investments, including by hedging through forward exchange contracts, and its 2016 annual report said it cut dollar exposure that year because of the high cost of hedging currency risk.
France repatriated all its U.S.-held gold in 2025 and early 2026, yet its dollar share of reserves stayed steady at 60 percent, even as the dollar's overall share of global reserves declined in IMF data. Weiss attributes a large fall in the French dollar share in 2023 to sales of dollar assets by the Banque de France to generate net income when net interest expenses rose quickly, rather than to a change in preference about dollar reserves.
The Netherlands moved two-fifths of its U.S.-stored gold to London in 2026. The dollar share of its reserves saw a concurrent 10-percentage-point decline, but it remains above 2018 lows and still dominates Dutch reserves. Weiss notes that monthly IMF data and the Dutch central bank's annual figures should in principle match but in practice do not, especially after 2022, with the monthly-based dollar share persistently lower.
What Would Actually Signal a Shift
Weiss concludes that in all these cases the central banks continue to hold most reserves in U.S. dollar assets, indicating no substantial diversification away from the dollar. He writes that the dollar share of reserves may depend on sanctions risk alongside other factors such as the size and strength of the U.S. economy and the depth and liquidity of U.S. financial markets, and that for these euro area central banks the economic benefits of holding dollar assets appear to outweigh any potential costs.
The note adds that official statements by these central banks about the relocations do not suggest concerns about sanctions or expropriation as a key motivation. A 2026 World Gold Council survey, cited in the note, shows a growing number of central banks reporting a preference for holding gold in domestic vaults, a custody trend that is separate from how they weight currencies.
For readers watching the dollar, the note's message is that a gold headline alone says little. The signal to watch is the currency composition of reserves, not the address of the vault. Weiss's earlier work, reported by Kitco News, makes a related point: the rise in gold's share of global reserves is mostly explained by a handful of countries with large legacy holdings from the Bretton Woods era that have not bought gold meaningfully since the 1970s, and by higher gold prices driven largely by private demand rather than central bank buying.
That legacy dates to 1971, when President Richard Nixon suspended the dollar's convertibility into gold, ending the Bretton Woods link under which a foreign central bank could hand the U.S. Treasury $35 for an ounce of gold. Since then the dollar's value has rested on the Federal Reserve's management rather than on metal, and the dollar's price against other currencies is set daily by buyers and sellers.
Weiss also noted that foreign official investors bought nearly $200 billion of U.S. Treasury securities on net from 2022 through April 2026, despite several major reserve holders selling hundreds of billions of dollars of reserves to support their currencies after 2021. Treasury securities, he concluded, remain an important part of reserve portfolios.
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