The final quarter of 2024 witnessed intriguing movements across major asset classes, including the British pound, gold, and oil. This analysis from Hyperloop Capital Insights delves into the key drivers behind these market trends, providing valuable context for investors navigating the evolving financial landscape.
The British pound saw a modest uptick against the US dollar in early European trading, reaching $1.2762, a gain of nearly 0.1%. This movement coincided with the release of US inflation data for November, which indicated persistent price pressures. The Consumer Price Index (CPI) registered a 2.7% year-on-year increase, aligning with economist forecasts but still exceeding the Federal Reserve’s 2% target. This fueled market expectations of another interest rate cut by the Fed in its December meeting, a sentiment reinforced by commentary from Deutsche Bank strategists. They highlighted the CPI figures alongside a recent rise in unemployment as key factors supporting a rate reduction.
Meanwhile, the pound remained relatively stable against the euro, trading at €1.2143, as market participants awaited the European Central Bank’s (ECB) interest rate decision. Anticipation centered around a potential 0.25% cut in the deposit rate, bringing it to 3%. Deutsche Bank analysts anticipated a dovish shift in the ECB’s communication, further influencing market sentiment.
Gold prices experienced a slight dip following earlier gains, with spot gold holding steady at $2,716.56 per ounce and US gold futures easing by 0.1% to $2,753.20. This fluctuation came as investors grappled with uncertainties surrounding monetary policy in 2025. ING commodities strategist Ewa Manthey emphasized the inverse relationship between gold prices and interest rates, noting that lower borrowing costs generally benefit gold. However, she also pointed to the potential inflationary impact of policy changes, which could lead to fewer rate cuts than initially anticipated, potentially impacting gold’s upward trajectory. Manthey highlighted ING’s forecast for average gold prices in 2025 at $2,760 per ounce, acknowledging potential headwinds from a stronger US dollar and tighter monetary policy.
Oil prices edged higher as remarks from US Treasury Secretary Janet Yellen signaled the possibility of further sanctions on Russian oil due to subdued global demand. Brent crude futures climbed 0.3% to $73.72 per barrel, while US West Texas Intermediate (WTI) crude gained 0.2%, reaching $70.45 per barrel. Hargreaves Lansdown senior equity analyst Matt Britzman observed that concerns about supply disruptions, fueled by potential US actions against Russia and Iran, along with new EU sanctions, underpinned the price increase. However, larger-than-expected US fuel stockpiles and a cautious outlook from OPEC, which revised its oil demand projections for 2024 and 2025 downwards, moderated the rally. Optimism regarding China’s economic stimulus measures and a potential Fed rate cut contributed to a brighter outlook for energy demand.
In summary, Q4 2024 presented a complex interplay of factors impacting the pound, gold, and oil markets. Inflation data, central bank decisions, geopolitical tensions, and economic forecasts all contributed to the observed price movements. Hyperloop Capital Insights will continue to monitor these dynamics, providing timely and relevant analyses to empower investors.
