Why France’s gold move may hold a cue for India in a post-Trumpian world

Its central bank, the Bank of France, pulled out its remaining gold reserves held in New York.

Admittedly, no central bank today relies on gold to back its currency. But gold reserves still serve as a safe haven during global trade uncertainties and are an essential component of national wealth as well as financial security. They are often used as a hedging tool against inflation and currency fluctuations.

So, it is not as if France has reduced its gold holdings.

Nor was the action carried out overnight. Between July 2025 and January 2026, it sold 129 tonnes of gold it had stored in New York since World War II, and used the proceeds to buy higher-quality gold bars in the European market, storing them in its underground vault in Paris.

With it, France now holds all the 2,437 tonnes of its gold domestically. It helped, of course, that the price of gold surged in recent times—the gold sale helped turn the French central bank’s 7.7 billion euro net loss in 2024 to an 8.1 billion euro net profit in 2025.

Bank of France governor François Villeroy de Galhau denied the move was motivated by geopolitical considerations, noting that it was purely technical in nature. The older bars it held needed to be upgraded to meet contemporary global standards, but it was easier to buy compliant gold in Europe than to refine and ship the old bars. That was the official reason.

What was unstated perhaps was the desire to move the gold out of the reach of the US, which has not hesitated to weaponise finance and use the preponderantly US-centric global financial order to serve its own ends and penalize those that differ with it.

But France is not the first country to consider such a move, nor is it likely to be the last.

Germany, which still holds roughly a third of its gold in New York, is facing increasing calls to ship its gold out of the US as Washington’s unilateral ways stoke distrust even among its North Atlantic Treaty Organization allies over a possible abuse of its financial powers.

More broadly, an International Monetary Fund (IMF) working paper shows that imposition of financial sanctions by the US and its allies has typically been associated with an increase in the share of central bank reserves held in gold, especially for countries less geopolitically aligned with America.

For India, the last time it was at the receiving end of US sanctions was after its 1998 nuclear tests. But we need to be alert to heightened geopolitical risks in the post-Trumpian world.

Research by the Brookings Institution based on IMF data shows that while India was the fourth-largest purchaser of gold after Russia, China and Turkey between 2007 and 2015, it moved up to the third spot during 2015 to 2024.

According to India’s latest Economic Survey too, the share of gold in its foreign exchange reserves—consisting of foreign currency assets (bonds of the US and other major governments and deposits with foreign central banks), gold, special drawing rights and reserve tranche position with the IMF—has been rising.

This is a welcome reset of our reserve composition. Perhaps we should also take a cue from France and tighten control over what belongs to us.