The gold market has started off on a slight corrective track this morning with part of that weakness likely the result of the sharp gains in prices and expanded volatility seen in the prior two trading sessions. However the dollar has also broken out to the upside in a fashion that should increase currency related selling of gold.

While there would appear to be negative trade vibes flowing from Chinese press outlets overnight that potential supportive safe haven storyline is countervailed by a surprise Indian proposal to "increase" the gold import duty to 12.5%.

Over the past several months indications appeared to be pointing to the potential for a cut in the Indian gold import duty from its current 10% level and that certainly sets the stage for a reduction in Indian jewelry demand as higher duties will add to the final retail price.

In fact Indian jeweler shares fell in response to the sudden change of policy news and Indian imports over the prior three years have been significant 955 tons, 778 tons and 968 tons and therefore the duty change is important to the world Gold demand equation.

However the focus of the market today will obviously be on the US payroll report and whether that report adds to or detracts from the likelihood of a US rate cut this month. Traders should expect expanded volatility and the potential for a 2-3 week trendsetting signal this morning.

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