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 undoubtedly be on the US non-farm payrolls data as the main key risk event ahead. The consensus is projecting 164,000 US job additions for December, with the unemployment rate expected to remain steady at 4.2%, in line with the Federal Reserve’s (Fed) economic projections. Wage growth is anticipated to grow at 0.3% month-on-month, slightly easing from the prior 0.4%.

A little deviation from the consensus may provide Wall Street the calm it needs, given that stronger economic data does not necessarily translate to increased risk-taking, as evidenced by the stronger ISM services Purchasing Managers’ Index (PMI) data this week. With early discussions of inflation risks resurfacing in 2025 due to US reflation and Trump 2.0, stronger job gains could reignite such concerns, suggesting that market reactions to any significant deviation from consensus may be volatile and unpredictable.

Any stronger job report may lead Fed rate expectations to lean further towards the hawkish view of just one rate cut this year, potentially supporting the US dollar with higher Treasury yields, which could impact equities’ performance.

Gold prices drift higher, but $2720 level on watch as critical resistance

A stronger US dollar and higher Treasury yields, fuelled by more hawkish Fed expectations, have been taken in stride by gold prices, which have drifted to a three-week high. This affirms the $2610 level as a key support confluence, where lower trendline support stands firm.

However, the $2720 level will be closely watched as a critical resistance point ahead, with the level twice rejecting price advances since November last year. Overcoming this level may suggest buyers are taking greater control and could see prices aiming for a new all-time high within the broader rising channel formation.

Gold daily chart