全球市场笔记 GLOBAL MARKET NOTES

April twentieth, two thousand twenty-six April 20, 2026

“When Gold Returns to a Monetary and Rates Pricing Framework”

《When Gold Returns to a Monetary and Rates Pricing Framework》

Author: Ariston

X ｜

Subscription｜

Custom models by private message (currently only daily models for the Chinese and US stock markets are available)

WeChat: AristonMacro (add Please note your institution and name, Those without a note will not be approved）

DM for custom models

I. Aluminum: Still Above a Key Bull-Bear Price Level

The aluminum market no longer needs strong demand growth to remain structurally tight. Following disruptions in the Middle East, with Chinese supply holding at its ceiling and growth in supply outside China insufficient to offset the persistent supply shortfall, the system’s supply elasticity has declined.

Unlike cyclical downturns in the past, when weak demand and an eventual supply recovery eased the market, the current shock is supply-driven, and most of the damage is already done. Even with weak demand, the supply deficit this year will reach ~2.7 million tonnes. Only a severe recession comparable to the Volcker-era recession or the 08/09 global financial crisis could be enough to stabilize inventory coverage.

Importantly, persistent deficits cannot remain merely theoretical. If consumption exceeds production, the imbalance has to be absorbed through inventory drawdowns. This is now the core issue facing the market. Initially, the deficit can be absorbed by hidden, financed, merchant and pipeline inventories. As a result, tightening cycles are typically volatile, slow-moving and driven by macro factors rather than erupting immediately. Over time, inventory drawdowns change the market structure as buffer stocks shrink and short hedges associated with financing and carrying costs are unwound.

This tightening does not require sustained speculative long accumulation. As buffer stocks shrink and hedges are unwound, the market becomes more exposed even without new long positioning. Under these conditions, relatively small shortages can trigger disproportionate, nonlinear price reactions.

Figure: China’s aluminum industry has largely exhausted its former idle capacity, affecting aluminum prices and supply elasticity

The same is true on the demand side. Aluminum demand today is less cyclical than in the past.In the past, aluminum demand relied more heavily on real estate, traditional manufacturing and the general industrial cycle. Now, a larger share of demand growth comes from power grids, renewable energy infrastructure and electrification supply chains. The CAET end-use tracker shows that energy-transition-related demand is already close to a quarter of Chinese aluminum demand. This part of demand receives more policy support and is less sensitive to a slowdown in the traditional economy. China’s share of global aluminum demand is also close to 60%. In global shocks like those of 08-09, ex-China typically bears more of the cyclical demand decline, while Chinese demand is relatively more stable. As long as China does not suffer a severe slowdown, global aggregate demand is unlikely to contract sharply. Downside elasticity on the demand side is lower than in past recessions, and the ability of weakening demand to weigh on prices has declined accordingly.

Figure: The substitution thesis fails

The substitution thesis is likewise unlikely to put downward pressure on aluminum prices quickly.The relative prices of copper to aluminum and plastic to aluminum remain high, so many end users will not switch materials on a large scale immediately just because aluminum prices rise. The copper-aluminum price ratio is in a historically high range, and incentives to substitute aluminum remain in multiple end-use applications. Naphtha is used as a proxy for the plastics segment, and competing materials themselves are not cheap.

The steel-to-aluminum price ratio in China has risen quite high, and the economics of some substitution within China have become quite extreme, while ex-China markets have not reached the same point. Downstream users are facing a world in which multiple substitute materials are all similarly expensive, so broad substitution away from aluminum will not happen as quickly as it did in past cycles.

...

This is why aluminum's upside convexity remains strong despite macroeconomic headwinds. Although short-term volatility and position reductions may put pressure on prices, downside appears increasingly limited except in the event of a severe recession.

Chart: CMX Aluminum (daily chart, as of 260519)

After going long aluminum near the bottom, as discussed earlier, 1) remains firmly above the daily swing long/short price line, and 2) capital is returning to leveraged positions.A breakout here above 3600 would trigger another leg higher, Set your own alert and watch.

Traditionally, gold plays three roles at the same time: 1) a crisis hedge, 2) an inflation hedge, and 3) a monetary-and-rates hedge. These three functions often overlap under normal conditions, but under different shocks, the dominant driver can change.

If viewed only through the lens of crisis hedging, gold's performance this time has indeed been disappointing. Under normal logic, when geopolitical conflict escalates, equities fall, and risk appetite disappears, gold should usually perform more strongly. In the early stage of many crises, gold can indeed see a brief pullback first because it is highly liquid and capital may use it to meet margin calls, adjust positions, and reallocate exposure. But this time the decline has gone far beyond what can be explained by liquidity alone.

The inflation-hedge layer has also not worked as directly as many people had originally assumed.The first-round inflation impulse driven by higher oil prices and supply-chain disruptions does not automatically make gold perform better in the short term. The key variable is whether that kind of inflation forces central banks to remain cautious for longer, compresses room for rate cuts, delays cuts, or raises the risk of further hikes.Once that logic takes hold, the opportunity cost of holding a non-yielding asset like gold rises, which in turn creates selling pressure.

The inflation-hedge layer has also not worked as directly as many people had originally assumed. The first-round inflation impulse driven by higher oil prices and supply-chain disruptions does not automatically make gold perform better in the short term. The key variable is whether that kind of inflation forces central banks to remain cautious for longer, compresses room for rate cuts, delays cuts, or raises the risk of further hikes. Once that logic takes hold, the opportunity cost of holding a non-yielding asset like gold rises, which in turn creates selling pressure.

At the same time, because the market believes the United States is relatively less directly exposed to the energy shock, part of the safe-haven demand that might otherwise have gone into gold instead flowed into the U.S. dollar. That also reduced gold's appeal as a hedge against fiat-currency debasement.

...

What has truly dominated gold pricing in this round is its monetary-hedge function, or, put differently, the monetary-and-rates framework:

Chart: Gold has re-linked itself to real rates

The chart above shows the relationship between gold prices and real rates very clearly. From this perspective, after the Middle East conflict, gold has returned to a pricing framework driven by real rates.

Since the conflict began, gold has been trading more as a market expression of Fed repricing and real-rate repricing. That is exactly why its crisis-protection and inflation-protection functions have, in the short term, been overwhelmed by monetary-policy logic.

In fact, gold is more like a conditional safe-haven asset, not one that rises unconditionally and indiscriminately in every crisis. What needs to be distinguished is how a given conflict will affect inflation, interest rates, and the policy response. If one simply uses gold to hedge the label of “geopolitical conflict,” it is very easy to hedge the wrong risk.

In fact, gold is more like a conditional safe-haven asset, not one that rises unconditionally and indiscriminately in every crisis. What needs to be distinguished is how a given conflict will affect inflation, interest rates, and the policy response. If one simply uses gold to hedge the label of geopolitical conflict, it is very easy to hedge the wrong risk.

Chart: Since the Middle East conflict began, gold has materially underperformed other asset classes, and has also underperformed its own historical post-shock behavior

In the past, many risk events were closer to demand shocks. Equities fell, bond yields declined, and the market pre-priced weaker growth together with expectations of a more dovish Fed. That kind of environment is naturally supportive for gold.

By contrast, the current U.S.-Iran shock is a global energy-supply shock. Higher oil prices and supply disruptions first bring inflation stickiness and policy caution, not easing expectations.

Chart: US10Y overlaid with CMX gold (daily chart, as of 260420)

Chart: US10Y overlaid with CMX Gold (daily chart, as of 2026-04-20)

In fact, since early 2, the correlation between U.S. 10-year Treasury yields and CMX gold has quickly turned significantly negative. In recent weeks, the negative correlation between gold and real rates has already re-established itself.

In fact, since early February, the correlation between U.S. 10-year Treasury yields and CMX gold has quickly turned significantly negative. In recent weeks, the negative correlation between gold and real rates has already re-established itself.

Chart: US10Y (daily chart, as of 260420)

Chart: US10Y (daily chart, as of 2026-04-20)

So far, U.S. Treasury yields have retreated from their highs, but have still not returned to their pre-conflict lows. The U.S. 10-year Treasury yield is currently around 4.26%, compared with a prior high near 4.42%, while before the conflict it was below 4%.As long as nominal yields and real rates have not fully come back down, gold will continue to face a higher holding cost.

So far, U.S. Treasury yields have retreated from the highs, but they still have not returned to the lows seen before the conflict. The U.S. 10-year Treasury yield is currently around 4.26%, versus a prior high near 4.42%, while before the conflict it was below 4%. As long as nominal yields and real yields here have not fully come back down, gold will continue to face a higher holding cost.

Beyond the 10-year real rate, the front-end rate path has also become more important.This time, gold's relationship with the U.S. 2-year Treasury yield is also different from most historical episodes.In many past crises, a decline in the 2-year yield would support gold. This time, front-end rates moved up first, reflecting that the market interpreted the shock as inflationary in nature and as limiting the Fed's room to ease. That, too, weighed on gold's performance.

Beyond the 10-year real rate, the front-end rate path has also become more important. This time, gold's relationship with the U.S. 2-year Treasury yield is also different from most historical episodes. In many past crises, a decline in the 2-year yield would support gold. This time, front-end rates moved up first, reflecting that the market interpreted the shock as inflationary in nature while also limiting the Fed's room to ease. That, too, weighed on gold's performance.

Chart: US02Y overlaid with CMX gold (daily chart, as of 260420)

Chart: US02Y overlaid with CMX Gold (daily chart, as of 2026-04-20)

In recent years, central bank behavior, reserve diversification, and geopolitical developments had at one point significantly weakened this relationship. Following this shock, the market is likely to return to the old framework, trading gold's response by observing how real rates change.

Over the past few years, central-bank behavior, reserve diversification, and geopolitical developments had at one stage clearly weakened this relationship. After this shock, the market is very likely to return to that older framework, namely trading gold by watching how real rates evolve.

II. After the Iran war, when the renminbi became a safe asset

II. After the Iran war, the renminbi became a safe asset

In 3, cross-border renminbi receipts and payments handled by Chinese banks on behalf of clients reached 9.5 trillion yuan. This was the first time in history the figure exceeded 8 trillion yuan, with year-on-year growth of roughly 30% for the month. More importantly, the renminbi's share of all cross-border payments rose to 56.4%, while the U.S. dollar's share fell to 39.8%, dropping below 40% for the first time. These figures are highly significant because they show that the use of the renminbi in China-related cross-border payments has risen structurally.

In March, cross-border renminbi receipts and payments handled by Chinese banks on behalf of clients reached RMB 9.5 trillion. This was the first time in history that the figure exceeded RMB 8 trillion, with year-on-year growth of roughly 30% for the month. More importantly, the renminbi's share of total cross-border payments rose to 56.4%, while the U.S. dollar's share fell to 39.8%, dropping below 40% for the first time. The significance of these numbers is very large because they show that the use of the renminbi in China-related cross-border payments has already seen a structural rise.

The second most important set of data comes from CIPS. The increase in CIPS transaction volume shows that renminbi internationalization is also reflected in more frequent use of actual clearing infrastructure. CIPS now has 194 direct participants and 1597 indirect participants. In 3, average daily transaction volume reached 9205 hundred million yuan, up 48.5% from 2, while the single-day peak exceeded 1.22 trillion yuan for the first time.

The second most important set of data comes from CIPS. The rise in CIPS transaction volume shows that renminbi internationalization is also showing up in the more frequent use of actual clearing infrastructure. CIPS now has 194 direct participants and 1,597 indirect participants. In March, average daily transaction volume reached RMB 920.5 billion, up 48.5% from February, while the single-day peak exceeded RMB 1.22 trillion for the first time.

Chart: Cross-border renminbi payments saw a historic rise in March

Chart: Cross-border renminbi payments saw a historic surge in March

The sudden rise in cross-border renminbi payments in 3 may partly reflect changes in trade flows. For example, China reduced imports of Gulf crude, which is typically settled in dollars, while increasing exports of solar panels, electric vehicles, and other goods more likely to be settled in renminbi. In other words, the trade structure itself is creating more use cases for the renminbi.The deeper logic is that the petrodollar system was already loosening. Middle Eastern oil is now sold mainly to Asia rather than the United States, while sanctioned oil from Russia and Iran is increasingly traded outside the dollar system. The current conflict may further expose cracks in the petrodollar system, because it is also undermining confidence in the stability of the U.S. security umbrella in the Gulf.

Part of the sudden rise in cross-border renminbi payments in March may have come from changes in trade flows. For example, China reduced imports of Gulf crude that are typically settled in dollars, while increasing exports of solar panels, electric vehicles, and other goods that are more likely to be settled in renminbi. Put differently, the trade structure itself is creating more use cases for the renminbi. At a deeper level, the petrodollar system was already loosening. Middle Eastern oil is now sold mainly to Asia rather than to the United States, and sanctioned oil from Russia and Iran is increasingly being traded outside the dollar orbit. The current conflict may further expose the cracks in the petrodollar system because it simultaneously weakens confidence in the stability of the U.S. security umbrella in the Gulf.

One month is still far too short to judge whether the petrodollar system has entered a trend reversal. At this stage, it cannot yet be ruled out that these changes are merely short-term phenomena. However, If the oil-price shock ultimately drives the world further away from oil and gas and toward renewable energy, and the supply of products related to these new energy sources continues to be dominated by Asian manufacturers, especially Chinese manufacturers, then the renminbi's scope for international use may expand further in trade.In other words, in this round of shocks, renminbi internationalization may benefit both from changes in the way energy is settled and from the energy transition itself.

One month is still far too short to judge whether the petrodollar system has already entered a trend reversal. At this stage, it still cannot be ruled out that these changes are merely short-term phenomena. However, if the oil-price shock ultimately pushes the world further from hydrocarbons toward renewable energy, while supply in those new-energy products continues to be dominated by Asian manufacturers, especially Chinese manufacturers, then the renminbi's room for international use may widen further along the trade dimension. In other words, in this round of shock, renminbi internationalization may benefit both from changes in the way energy is settled and from the energy transition itself.

More important than geopolitics itself is the renminbi's stability during this round of global volatility. The key condition enabling renminbi internationalization to accelerate is the stable performance of the renminbi exchange rate and interest rates amid extreme volatility.

More important than geopolitics itself is the renminbi's stability during this round of global volatility. The real core condition allowing renminbi internationalization to accelerate is the stable performance of the renminbi exchange rate and renminbi interest rates under an extreme-volatility environment.

Chart: The renminbi's core advantage in this conflict is stability

After the conflict broke out, the market again debated what actually counts as a safe asset. Traditional safe-haven assets such as gold, the yen, and U.S. Treasuries all experienced price volatility and even pullbacks in the early stages of the conflict, prompting many investors and companies to rethink the definition of a safe asset. The renminbi did not appreciate sharply, but its trading range was significantly narrower, which was in fact more practical for companies and institutions. The renminbi is one of the most stable currencies in the Group of Twenty.Although the renminbi was not the currency that appreciated the most against the U.S. dollar during this conflict, its trading range against the dollar was clearly narrower than that of other major currencies. For companies actually engaged in cross-border settlement and asset-liability management, stability is often more important than short-term appreciation.

After the conflict broke out, the market reopened the discussion of what actually counts as a true safe asset. Traditional safe-haven assets such as gold, the yen, and U.S. Treasuries all saw price volatility and even pullbacks in the initial phase of the conflict, causing many investors and corporates to rethink the definition of a safe asset. The renminbi did not appreciate sharply, but its trading range was materially narrower, and for corporates and institutions that was in fact more practical. The renminbi is one of the most stable currencies in the G20. Although it was not the currency that appreciated the most against the U.S. dollar during this conflict, its volatility range against the dollar was clearly narrower than that of other major currencies. For companies actually engaged in cross-border settlement and asset-liability management, stability is often more important than short-term appreciation.

The second piece of evidence on stability comes from interest rates. During the conflict, 10-year government bond yields rose by 30 to 50 basis points in most Group of Twenty countries, while China's 10-year government bond yield barely changed. This is very important because it means that, Renminbi assets have behaved more like a low-volatility anchor in both the exchange-rate and interest-rate dimensions, increasing the willingness of corporates and financial institutions to use the renminbi as a settlement and funding currency.

The second piece of evidence on stability comes from interest rates. During the conflict, 10-year government-bond yields in most G20 economies rose by 30 to 50 basis points, while China's 10-year government-bond yield barely moved. This matters greatly because it means renminbi assets behaved more like a low-volatility anchor on both the FX side and the rates side, which in turn raises the willingness of corporates and financial institutions to use the renminbi as both a settlement currency and a funding currency.

Chart: During the Iran war, renminbi interest rates barely moved

Likewise, what global surprise shocks most easily compress is borrowers' funding window and funding certainty.By contrast, the renminbi market remained stable during the conflict, making overseas borrowers more willing to view the renminbi bond market as a usable funding channel rather than merely a policy-driven choice.The most direct funding evidence comes from panda bonds. Issuance of panda bonds in 3 reached 380 hundred million yuan, a record high, nearly tripled year on year and 150% above the average monthly issuance in 2025. This means that onshore renminbi funding by foreign entities has already accelerated materially. Offshore renminbi bond issuance expanded at the same time. Dim-sum bond issuance in 3 reached 1140 hundred million yuan, up 173% year on year and about 50% above the average monthly issuance in 2025. This shows that renminbi bond funding, onshore and offshore alike, is accelerating simultaneously.This is crucial for renminbi internationalization, because if the internationalization of the payment currency is not accompanied by a simultaneous strengthening of its function as a funding currency, the sustainability of its international use will be constrained.

Likewise, what global surprise shocks most easily compress is borrowers' funding window and funding certainty. By contrast, the renminbi market remained stable during the conflict, making overseas borrowers more willing to view the renminbi bond market as a usable funding channel rather than merely a policy-driven choice. The most direct funding evidence comes from panda bonds. March panda-bond issuance reached RMB 38 billion, a record high, nearly triple year on year and 150% above the 2025 average monthly issuance. That means onshore renminbi funding by foreign entities has already accelerated materially. Offshore renminbi bond issuance expanded at the same time. March dim-sum bond issuance reached RMB 114 billion, up 173% year on year and about 50% above the 2025 average monthly issuance. This shows that renminbi bond funding, onshore and offshore alike, is accelerating simultaneously. For renminbi internationalization, that is crucial, because if the internationalization of the payment currency is not matched by strengthening of its funding-currency function, the sustainability of its international use is constrained.

Put differently, the renminbi is, on some level, becoming a safe asset. The meaning here is different from that of a traditional haven currency. It does not mean the renminbi must appreciate the most during a crisis. It means that in a high-volatility world, the renminbi provides the two things corporates and institutions need most: a predictable exchange-rate path and a stable local-currency funding environment.

...

Three. Some charts I am watching

III. Some charts I am watching

1/ China's first-quarter growth was driven more by exports and investment, while household savings remain elevated and domestic-demand release is still insufficient:

Chart: Chinese household deposits remain materially above the pre-pandemic trend line

2/ The rates narrative has shifted from Iran to Warsh:

Chart: Pricing changes from Polymarket

3/ The true source of current earnings resilience:

Chart: First-quarter earnings resilience remains highly concentrated in Mag 7 and a small number of structural winners

Chart: First-quarter earnings resilience remains heavily concentrated in the Mag 7 and a small number of structural winners

4/ The market has risen a lot, but positioning is not extreme

Chart: It has not yet entered the zone where crowding alone creates a need for contrarian concern

...

End of full text.

The companion U.S. equities, A/H shares, and commodities channels cover additional market detail and are still being continuously expanded:

U.S. equities:https://www.meridianresearch.app/home?product=us-strategies

U.S. equities: https://www.meridianresearch.app/home?product=us-strategies

A/H shares:https://www.meridianresearch.app/home?product=asia-strategies

A/H shares: https://www.meridianresearch.app/home?product=asia-strategies

Commodities:https://www.meridianresearch.app/home?product=commodity-strategies

Commodities: https://www.meridianresearch.app/home?product=commodity-strategies

Note: All content in this document is for reference only. It does not constitute any investment advice, nor does it serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on such information as the basis for decision-making.

Note: All content in this document is for reference only. It does not constitute any investment advice. It is not a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on such information as a basis for decision-making.

Global Markets Notes GLOBAL MARKET NOTES

Subscribe to 跨市场资产策略笔记