No matter how much gold you have, you cannot sell it immediately

Gold reserves play an important role in a country's economic crisis, but immediate selling of kilos of gold is difficult.

Gold vs currency 

How does gold reserves affect currency

There are a few reasons why a country with a huge amount of gold reserves might still sell dollars to buy foreign currency or goods instead of trading gold directly:

Liquidity, Gold is a relatively illiquid asset, meaning that it can be difficult to sell quickly or at a fair price. Foreign currencies and goods are much more liquid, making them easier to trade.

Transparency, Trading gold can be complex and opaque, making it difficult to ensure that the country is getting a fair price and that the transaction is not fraudulent. Trading foreign currencies and goods is much more transparent and easier to audit.

Diversification,  Holding a diversified portfolio of assets is a good way to reduce risk. By holding both gold and foreign currencies, a country can reduce its exposure to fluctuations in the value of either asset class.

International relations,  Trading foreign currencies and goods is a way to build and maintain relationships with other countries. This can be important for a variety of reasons, such as promoting trade and investment, and ensuring security cooperation.

In addition to these practical reasons, there are also some theoretical reasons why a country might choose to hold some of its reserves in foreign currencies instead of gold. For example, some economists believe that gold is not a good long-term store of value because it does not generate any income. They argue that it is better to hold assets that can generate income, such as foreign currencies or bonds.

Of course, the decision of how much gold and foreign currency to hold in reserves is a complex one that depends on a variety of factors, such as the country's economic situation, its geopolitical environment, and its risk tolerance.

Here are some specific examples of how countries have used their gold reserves:

In 2011, Switzerland sold 256 tons of gold to raise money to support its currency, the Swiss franc.

In 2013, Cyprus sold 13 tons of gold to raise money to help pay for its bailout by the European Union and the International Monetary Fund.

In 2016, the United Kingdom sold 395 tons of gold to raise money to reduce its national debt.

In all of these cases, the countries could have traded their gold directly with other currencies or goods. However, they chose to sell dollars instead because it was more convenient, more transparent, and less risky.