Investors have now shifted their focus to the US December nonfarm payrolls report, due on 9 January. This data is regarded as a key gauge for the future direction of Federal Reserve monetary policy.

Surveys show economists expect December to see the addition of just 60,000 jobs, well below the prior month’s 64,000. The unemployment rate is forecast to edge down slightly from 4.6% to 4.5%. If the figures meet or fall short of these expectations, it would further reinforce market bets on two rate cuts by the Fed this year.

A series of recent leading indicators already suggests that the US labour market is cooling. Initial jobless claims rose moderately last week to 208,000. While this is still below some of the more pessimistic forecasts, continuing claims jumped sharply to 1.914 million, signalling emerging structural weakness.

In November, job openings fell by more than expected and private-sector job growth also missed forecasts. At the same time, announced layoffs in 2025 surged 58% to a five-year high, concentrated mainly in the federal government and technology sectors, reflecting AI integration and cost-cutting efforts.

On the other hand, third-quarter labour productivity growth hit a two-year high, as companies generated more output by boosting the efficiency of existing staff. This is seen as a classic feature of “jobless” economic expansion. In such a backdrop, the Fed is trying to balance weakening employment against inflation that remains slightly above target. In the near term, the likelihood of aggressive additional rate cuts is limited, but the medium- to long-term easing bias remains intact.

As a non-yielding asset, gold naturally benefits from a low-rate environment. If nonfarm payrolls disappoint and strengthen expectations of rate cuts, gold prices are likely to find strong support. Conversely, if the data significantly beats expectations, it could trigger a short-term correction.

At present, markets broadly expect the Fed to cut rates twice in 2026, a view that contrasts with some internal disagreement at the Fed. At its December meeting, the Fed signalled just one rate cut this year, but investors believe labour-market developments will ultimately push policymakers toward more easing.

Fed Chair Jerome Powell’s term is due to end in May, and the uncertainty around new leadership adds another layer of risk. Overall, however, the longer-term trend toward a lower interest-rate ceiling remains favourable for gold. Beyond economic data, persistent geopolitical tensions continue to underpin safe-haven demand for the metal.

Market Commentary:

US actions in Venezuela and around Greenland, along with potential tariff policy shifts under the Trump administration, could all amplify market uncertainty. While a sharply narrower trade deficit and a surge in productivity highlight the resilience of the US economy, rising fiscal debt and potential tariff-refund liabilities are prompting investors to lean more heavily on gold as a hedge. Gold is expected to rise to 5,000 USD per ounce in the first half of 2026.