Global Markets on August 21: Fed Minutes Turn Hawkish, Gold Hits New Multi-Month High

(Lead) During the Asian session on August 21, global financial markets continued the choppy pattern that has characterized August. The latest minutes from the Federal Reserve's July meeting showed growing concern among committee members about sticky inflation, with several officials arguing that further rate hikes would be warranted if price pressures did not ease toward the 2% target. In response, the U.S. Dollar Index briefly fell below 99 to hover near a three-month low, while spot gold climbed above $4,450 per ounce to a near three-month high. Energy stocks bucked the trend, supported by geopolitical risk and resilient oil prices, becoming a key safe-haven destination for early-session capital. I. Fed Minutes: The Bar for Hiking Has Fallen Sharply Released early Thursday Beijing time, the minutes of the Federal Reserve's July FOMC meeting were interpreted as markedly hawkish. Although the July meeting ultimately left the federal funds rate unchanged at 3.50%–3.75%, the minutes revealed three dissenting votes favoring a 25-basis-point hike and stated that "many" participants believed further tightening would be necessary if inflation did not continue moving toward the 2% target. The minutes also noted that AI-driven investment was boosting aggregate demand, while Middle East tensions were adding upside risk to energy prices, making the disinflation path more uncertain. Markets reacted swiftly. The CME FedWatch tool showed traders pricing the probability of at least one rate hike by year-end rising to around 68%, while the probability of a September hike held near 20%. At the same time, the U.S. Treasury yield curve was repriced higher, with the 10-year yield approaching 4.55% and the 30-year yield staying above 5%, compressing valuation multiples for risk assets. II. Dollar Breaks Below 99 as Institutions Split on the Outlook Torn between rekindled rate-hike expectations and softer U.S. economic data, the U.S. Dollar Index (DXY) weakened again during the Asian session, touching a low near 98.70—its weakest level since mid-May. Citi's currency strategy team believes the DXY could fall further to around 98.30 over the next three months, arguing that markets are digesting a less hawkish Fed, expanded Treasury buybacks of long-dated bonds, and the approach of U.S. midterm elections. HSBC's foreign-exchange team, however, remains cautious, suggesting that robust economic growth and favorable interest-rate differentials could allow the dollar to regain strength amid volatility. This divergence itself signals a lack of consensus in the market: on one hand, weaker retail sales and employment data have revived stagflation narratives; on the other, elevated energy prices and fiscal expansion continue to support inflation expectations. The dollar is likely to remain range-bound in the near term rather than follow a one-way trend. III. Gold Breaks $4,450; Energy Stocks Become a Haven Against a backdrop of dollar weakness and geopolitical risk, spot gold broke above $4,450 per ounce on Thursday, with COMEX gold futures settling near $4,520. Gold-stock ETFs rose nearly 3% in early trading. Analysts noted that escalating U.S.-Iran confrontation is undermining the dollar-credit narrative, while continued central-bank gold purchases are reinforcing the precious metal's long-term allocation logic. The energy sector also stood out. With negotiations over reopening the Strait of Hormuz deadlocked and the U.S. threatening "the toughest economic action" against Iran, Brent crude remained above $90 per barrel and WTI crude hovered near $86. The Energy Select Sector SPDR Fund (XLE) gained about 1.8% in the previous U.S. session, one of the few sectors to finish in positive territory. IV. Asia-Pacific Markets Open Mixed Asia-Pacific equities opened mixed. Japanese shares edged lower as the yen strengthened, with the Nikkei 225 down about 0.4% in early trading. South Korea's Kospi opened lower on semiconductor weakness but trimmed losses as new-energy vehicle supply-chain stocks recovered. In China, A-share gold, oil & gas, and power stocks opened higher, while growth-oriented technology names underperformed amid rising global rates. Hong Kong's Hang Seng Index swung in a narrow range, with resource plays and high-dividend names relatively resilient. (Conclusion) Overall, global markets on August 21 remain caught between data validation, policy repricing, and geopolitical risk premiums. For investors, alongside monitoring the Fed's policy trajectory, the defensive attributes of gold and energy, as well as cross-market rebalancing opportunities created by dollar volatility, deserve continued attention in this choppy environment.