As France Yanks Last US-Based Gold Reserves, UBS Expects Demand From China To Persist
When France repatriates its gold, it has historically been worth paying attention to (think De Gaulle's demands culminating in the 'Nixon Shock').
However, then (as now), there was no cliff-like event, it was a slow-building crisis and perhaps the news that Gold has officially emptied its US-stored gold reserves (held in New York) is another straw on the back of the fiat standard to keep an eye on.
RFI reports that The Banque de France (BdF) announced last week that it generated a capital gain of €12.8 billion after upgrading 129 tonnes of gold – about 5% of France's total reserves – between July 2025 and January 2026.
The gold was the last of the French reserves held in New York. It was replaced with the equivalent amount bought in Europe and held in Paris.
The BdF has been gradually replacing older, non‑standard gold with bars that meet modern international standards since 2005.
It moved the majority of its gold reserves out of the US Federal Reserve and the Bank of England between 1963 and 1966.
Rather than refining and transporting the gold that remained in the US, the bank opted to sell it and purchase new, compliant bullion on the European market.
BdF governor Francois Villeroy de Galhau insisted that the decision to move France’s gold out of the US was not politically motivated.
Instead, it was based on the fact that higher-standard gold is traded on the European market, and buying new gold was easier than refining the existing stock.
Not everyone is buying what the BdF Governor is selling.
Here's Commodity Discovery Fund founder (and infamous prognosticator), Willem Middelkoop's somewhat more conspiratorial take:
My two cents on the repatriation of French gold bars:
France asked to return their 12.5 kg gold bars
US had already sold them
US offered to wire the money
France accepted and bought new 12.5 kg gold bars in London
Both countries agreed on the following spin to sell the story:
- new bars bought to ‘meet current standards’
Spin is 100% bullshit
12.5 kg 999.9 pure gold bars have always been 999.9 pure gold bars of 12,5 kg
previous gold repatriations always happened without the ‘ need for ‘current standards’
MSM doesn’t ask questions and prints spin
Another PR disaster avoided for the US/FED
The rigging of the dollar system can go on
The can can be kicked a bit further down the road
It's hard to disagree too vehemently with the macro guru's take.
However, while France is repatriating, Germany is being urged to repatriate, and Turkey is selling amid war impacts, UBS Precious Metals team, led by Joni Teves, are confident that gold demand from China is likely to persist...
Conversations with various market participants in China revealed acute concerns about the implications of the conflict in the Middle East.
From our vantage point, the overall sentiment was quite negative, with a lot of the negative impact to the global macro outlook seen to have already been done, even if there an offramp from the US/Israel conflict with Iran emerges in the near future.
Many of those we spoke with had a cautious view on what recent events mean for the US, focusing on risks of stagflation and a weaker dollar.
There was scepticism about quickly markets priced in rate hikes across global central banks, with onshore concerns seemingly more skewed towards the impact of higher energy prices and heightened geopolitical uncertainty on growth.
Underlying positive gold outlook intact
Concerns about the outlook on global growth, inflation discussed and geopolitical risks likely plays into the continued positive sentiment towards gold.
Majority, if not all, of our conversations signalled an upside bias to gold price expectations over the medium to long term.
This is not entirely surprising given strong gold demand at the start of 2026 and notable resilience in March.
The outlook for Q2 remains constructive, particularly if gold prices stabilise and onshore premium holds.
There does not seem to be many bottlenecks when it comes to supply and securing import quotas and permits.
Moreover, retail and institutional investment demand is growing considerably amid:
1) changes to tax rules introduced last year (which keep investment gold exempt while raising tax costs for jewellery);
2) banks rolling out accumulation plans that are widely distributed via electronic platforms,
3) insurance companies in the pilot program starting to become more active.
Our understanding is that around half of insurance companies that are part of the pilot program allowed to invest up to 1% of AUM in gold have started to become more active.
Activities should be reflected in Shanghai Gold Exchange trade volumes, as these are the products they are allowed to trade.
SGE turnover has shown an increase over the past few weeks.
Mid-tier and/or insurance companies with higher risk appetite we think are the ones that are likely to be more active.
This is an encouraging development overall and we think the industry is still some distance from being fully allocated.
Long-term upside risks could come from expanding the program to the rest of the industry and/or to other sectors as well as increasing the allowable % to total AUM.
For insurance companies that have so far been more hesitant, the lack of expertise and gold’s lack of yield are likely key hurdles.
Near-term concerns & looking for entry levels
Gold’s sharp retracement at the end of February followed by further weakness in March despite rising geopolitical risks has understandably raised concerns.
Virtually every conversation we had in China covered the various reasons why gold prices came under pressure.
A degree of nervousness was palpable, as market participants stress-tested underlying assumptions and long term outlooks.
Ultimately, the questions were around whether current levels were attractive entry points or if there is room to be patient.
Professional subscribers can read the full UBS Note "From the Ground: Gold demand from China likely to persist" here at our new Marketdesk.ai portal