The final week of 2024 saw muted movements in the pound, gold, and oil markets as investors paused for the New Year holiday and awaited key economic data from major economies. This analysis from Hyperloop Capital Insights provides a concise overview of these market trends.
Table Content:
Pound Sterling Holds Steady Amidst Rate Cut Speculation
The pound remained relatively stable against the dollar, trading around $1.2566, despite lighter trading volumes due to the holiday season. While the pound has outperformed other major currencies against the dollar this year, recent market expectations of further interest rate cuts by the Bank of England (BoE) have exerted downward pressure. The BoE’s cautious approach to rate cuts in 2024, reducing borrowing costs by only half a percentage point, has provided support for the currency. However, a more hawkish US Federal Reserve and a strong US economy have bolstered the dollar, especially with rising US Treasury yields. Current market expectations anticipate 51.5 basis points of rate cuts from the BoE in the coming year. The pound also held steady against the euro, trading at €1.2060.
Gold Prices Remain Flat Amidst Competing Forces
Gold prices remained largely unchanged, with spot gold trading at $2,612.39 per ounce and gold futures settling at $2,627.50. Safe-haven demand continues to support gold prices, fueled by geopolitical uncertainties such as the ongoing Russia-Ukraine conflict and potential trade policy shifts under the incoming US administration. However, expectations of fewer rate cuts by the Federal Reserve could limit gold’s upside potential. Geopolitical tensions and a relatively flat dollar index have contributed to gold’s sideways movement. The precious metal is poised to end 2024 with a substantial 27% gain, its best annual performance in over a decade.
Oil Prices Dip as Investors Await Economic Data
Oil prices started the week with slight losses, with Brent crude futures falling to $73.98 per barrel and US West Texas Intermediate (WTI) crude dropping to $70.34. Traders are anticipating key economic data from China and the US, which will provide insights into the demand outlook from the world’s two largest oil consumers. Despite China’s economic underperformance in 2024, global oil consumption reached record highs, and oil stockpiles remain relatively low. This suggests a tightening supply outlook, potentially supported by anticipated economic improvements in China and lower interest rates in major economies. Market participants are closely monitoring upcoming PMI factory surveys from China and the US ISM manufacturing survey for further clues on economic health and potential impact on oil demand.
Conclusion
As 2024 concludes, market sentiment remains cautious with investors focusing on upcoming economic indicators and policy decisions. The interplay between geopolitical tensions, central bank policies, and economic data will continue to shape the trajectory of the pound, gold, and oil in the new year. Hyperloop Capital Insights will continue to monitor these developments and provide timely market analysis.
