Operation Economic Outcast Targets Bullion Flows
In August, the United States announced a new sanctions campaign against Iran branded Operation Economic Outcast. During this announcement, US Treasury Secretary Scott Bessent stated that the campaign expands secondary sanctions exposure to five specific categories: digital assets, technology, gold, aviation, and shipping.
The inclusion of gold in this enforcement framework marks a shift in how Washington categorizes bullion flows. The designation signals that the US now treats these flows as strategic financial infrastructure rather than ordinary commodity trade.
This announcement arrived roughly six months into the conflict with Iran. It followed a period where a fragile diplomatic track had produced General License X, a temporary authorization for Iranian oil transactions. That license was revoked on July 7.
Central Banks Increase Gold Holdings Amid Sanctions Pressure
The move to sanction gold comes as central banks globally increase their bullion reserves. In the second quarter of 2026, central banks purchased 289 tonnes of gold. This figure represents a record for that quarter and is up 62 percent year on year.
During the same period, gold-backed exchange-traded funds shed about 45 tonnes. The World Gold Council’s 2026 reserve survey found that gold has surpassed US Treasuries as the world’s largest reserve asset by value. The Federal Reserve has disputed this classification, attributing it to a price effect rather than a fundamental shift in reserve composition.
Looking forward, 45 percent of central banks expect to raise their gold holdings within twelve months. For governments in Moscow, Beijing, and the Gulf, recent developments reinforce that access to dollar clearing and SWIFT is conditional.
Gold Prices React to Federal Reserve Policy
Gold prices have experienced significant volatility in 2026. The metal entered the year at a record near $5,589 per ounce in January. It subsequently fell roughly 27 percent by late June as Federal Reserve Chair Kevin Warsh signaled potential rate hikes.
The dollar index reached a 13-month high during the period when gold prices fell. However, gold gained roughly 11 percent in the first half of August. The metal absorbed the Federal Reserve’s September rate increase by dipping to a six-week low before finishing that week higher.
Limitations of Gold as a Sanctions Shield
Despite the surge in central bank purchases, gold faces limitations as a primary tool for sanctions evasion. The US dollar still makes up about 57 percent of allocated reserves. It sits on one side of 89 percent of currency trades.
This data suggests that gold is eroding its role as a reserve asset faster than it is eroding the dollar’s role in payments. While central banks are diversifying, the dollar remains dominant in global financial transactions.