The gold there is held under the US Mint, which is part of the treasury, an executive branch office. It seems that it was accumulated in the mints for coinage, but the gold at Fort Knox is there just to be stored. This goes back to when the dollar was backed by gold, and theoretically you could exchange a dollar for an equivalent amount of gold. There were increasing limits on this, from Roosevelt making it only so that sovereigns could trade in their dollars, to the point where there were no more trade-ins after Nixon decided to close the gold window. The US does hold gold elsewhere – but at the mint cities of New York and West Point, and there is a vault under the Federal Reserve office in New York City where countries keep their accounts.
With the current free-floating currency, holding onto a hoard of gold most likely involves costs that are not necessary since the currency is not backed by gold. I can’t think of a good reason that we should hold it, but I can think of two reasons that probably inhibits the selling of the Knoxian gold. First, if the US government started unloading that much gold, it would be a sudden glut of supply in the gold market, so people who are involved in the gold market and have their own little hoards most likely would not like to see the price of gold driven down, as one thing that gives gold its value is its relatively rarity. The other reason that we most likely don’t sell off the hoard is that there is a very vocal minority who want to move back to the gold standard so that there is something backing the currency other than the full faith and credit of the US government. These people would be loud voices against any selling off the gold at Fort Knox.
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