US Gold Reserves Hit $1 Trillion in Value After Record Rally

Mike McGlone, Senior Commodity Strategist for Bloomberg Intelligence breaks down gold's record rally. The US Treasury’s gold reserves have surpassed $1 trillion in value — more than 90 times what’s stated on the government’s balance sheet — as the precious metal breaks new all-time highs.  The world’s biggest gold stash passed the milestone after prices rose above $3,824.50 an ounce on Monday, in a 45% rally this year. Its official value, however, based on the $42.22-an-ounce price set by Congress in 1973, is fixed at just over $11 billion.

Bullion has broken successive records this year as investors seek safety in the face of turbulence from trade wars, geopolitical tensions and growing concerns about a potential government funding crisis in the US. The rally has also been fueled by inflows into exchange-traded funds and the resumption of interest rate cuts by the Federal Reserve.

Earlier this year, an offhand comment from Treasury Secretary Scott Bessent sparked speculation that the government’s gold hoard would be marked to market, releasing a windfall of hundreds of billions of dollars. Bessent later dismissed the suggestion and Bloomberg reported that the idea isn’t under serious consideration.

Unlike most countries, the US’s gold is held by the government directly, rather than the central bank. The Fed instead holds gold certificates corresponding to the value of the Treasury’s holdings, and credits the government with dollars in return. That means that an update of the reserves’ value in line with today’s prices would unleash roughly $990 billion into the Treasury’s coffers. That would cover about half of the $1.973 trillion total US budget gap for the fiscal year through August, a deficit level that was only surpassed in 2020 and 2021, a senior Treasury official said when the numbers were released earlier this month. While it might seem tempting to change the way gold reserves are booked given the government’s debt-ceiling constraints, it would have far-reaching implications for the financial system, boosting liquidity and prolonging the Fed’s balance-sheet unwind.

Gold climbed to a record above $3,800 an ounce as precious metals surged, boosted by a weaker dollar as investors weighed a potential US government shutdown.

Bullion rose as much as 2% to an all-time high of $3,833.59 an ounce — eclipsing a peak reached last Tuesday — after notching six straight weekly gains. Silver increased as much as 2.4%, while platinum and palladium also rallied strongly, with advances underpinned by persistent market tightness and inflows into exchange-traded funds backed by the metals.

The dollar fell as investors awaited developments ahead of a planned meeting between top US congressional leaders and President Donald Trump later Monday — a day before federal funding runs out without an agreement on a short-term spending bill. A shutdown would threaten the release of key data including Friday’s payrolls report, which economists expect to show subdued jobs growth in September. A weaker greenback makes precious metals cheaper for most buyers.

Weaker employment figures would bolster the case for interest-rate easing by Fed officials at their next decision in October — a scenario that would make non-interest bearing precious metals more attractive. Still, there’s a high degree of uncertainty over the outlook for the Fed’s cutting cycle, with officials voicing diverging views on monetary policy, while some economic data came in stronger than expected.

Bullion doesn’t look overpriced relative to the dollar and Treasuries, which “ought to contain a level of Fed-related premium, given the nature of the risk” from the central bank’s potential loss of independence, Barclays Plc. strategists including Themistoklis Fiotakis and Lefteris Farmakis wrote in a note on Sunday. “This makes it a surprisingly good value hedge.”

Gold has soared 46% this year, setting successive peaks on central-bank demand and a resumption of interest-rate cuts by the Fed. Prices are on track to close out a third consecutive quarterly gain, with holdings in bullion-backed ETFs at the highest since 2022.

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