Asia Day Ahead: Focus on US Jobs Report, Gold Holds Channel Support

All eyes on US non-farm payrolls data to end the week

Attention will no doubt be on the US non-farm payrolls data as the main key risk event ahead. Consensus is looking for 164,000 US job additions for December, while unemployment rate is expected to be maintained at 4.2%, in line with the Federal Reserve (Fed)’s economic projections. Wage growth may grow at 0.3% month-on-month, slightly easing from the 0.4% prior.

Little deviation from consensus may offer Wall Street the calm it needed, given that stronger economic data may not necessarily translate to increased risk-taking as seen with stronger ISM services Purchasing Managers’ Index (PMI) data this week. With early chatters of inflation risks resurfacing in 2025 with US reflation and Trump 2.0, stronger job gains may reignite such concerns, suggesting that market reaction to any significant deviation from consensus may be volatile and not as clear cut. Any stronger job read may see Fed rate expectations lean further towards the hawkish view of just one rate cut this year, which could see the US dollar well-supported with Treasury yields higher, and that may come with some trade-off in equities’ performance.

Gold prices drift higher, but US$2,720 level on watch as critical resistance

A stronger US dollar and higher Treasury yields on more hawkish Fed expectations have been taken in stride by gold prices lately, which saw an upward drift to a three-week high. This validates the US$2,610 level as a key support confluence, where a lower trendline support stands in place.

That said, the US$2,720 level will be closely watched as critical resistance ahead, with the level twice rejecting price advances since November last year. Overcoming this level may suggest buyers taking on greater control and could see prices eye for a new all-time high within the broader rising channel formation.