Im curious about the mechanics of how this helps, could they not sell the gold for dollars to buy the oil?
No, it seems that Ghana is experiencing the classic forex problem of not being able to export enough valuable production in order to afford its imports, and it's very hard to reduce imports of fuel without drastic drops in either lifestyle or production capacity. And if you can't afford fuel to produce exports, then you have a death spiral.
Unfortunately, this story is not unique to Ghana and if the situation does not improve, I fear for how next year will look.
From what I understand, if you send US dollars around the world, they need to go through a US bank. All US banks must obey US government sanctions.
Now, if I were the Chinese with an overabundance of dollars (or worse, US Treasury bonds), I'd be trying to convert them into something else ASAP. They tried to buy companies, agricultural land and other things with intrinsic value, but were blocked by CFIUS and the EU is setting up its equivalent.
For them dollars earn much more being held rather than being invested in most other things within reach.
They can dig up more gold from their own mines which they're always doing anyway regardless of its prevailing price.
At some point, when push comes to shove, someone has to take delivery of something. This comes down to a matter of efficiency and faith. Who do you have more faith in? A random bank claiming to having a certain amount of gold on deposit? Your own central bank taking in tons of gold for delivery of a good?
This is silliness. If the USD is inflating too much (or if you perceive American sanctions as too onerous) then use a different currency like the Swiss Franc or the Euro.
None of this really matters. What matters is international settlements, agreements, and force. If you're on the wrong side of the WTO your economy is cooked anyway. Besides, if Ghana were some stalwart of anti-corruption then this may mean something, but it isn't. It's middle of the pack. Well behind Canada, Europe, Japan, and The United States; all countries or blocks that are perfectly fine selling and buying in USD.
In other words, they suddenly had granted themselves legitimacy to enforce US law anywhere on the planet as long as a single dollar changed hands.
As the US perceives itself as an empire, it makes complete sense from their POV.
But mayyybeeee, if you're in Ghana, you still cherish delusions of being a sovereign nation ...