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Gold Futures Settle Lower As Dollar Climbs Up On Rate Hike Bets

Gold prices edged lower on Thursday as the dollar surged higher amid rising bets the Federal Reserve will resort to aggressive rate hikes to rein in inflation.

The European Central Bank today signaled a 25 basis points hike in July and said it expects another hike in September.

A stronger dollar weighed on gold prices. The dollar, which was seeing some weak spells in recent sessions, displayed strength today on expectations of tighter policy from the Federal Reserve.

The dollar index climbed to 103.23 on rate hike prospects.

Gold futures for August ended lower by $3.70 or about 0.2% at $1,852.80 an ounce.

Silver futures for July ended down by $0.277 at $21.817 an ounce, while Copper futures for July settled at $4.3810 per pound, down $0.0735 from the previous close.

The European Central Bank (ECB) today confirmed its intention to hike interest rates at its policy meeting next month and also signaled another rate hike in September in the event of inflation not cooling by then.

The ECB, which confirmed ending net asset purchases by the end of June, expects annual inflation to hit 6.8% in 2022, compared to its March projection of 5.1%. The bank expects inflation to drop to 3.5% next year and 2.1% in 2024, as against earlier projections for a 2.1% rise in 2023 and 1.9% in 2024.

The ECB has revised its growth forecast to 2.8% for the current year and 2.1% in 2023, compared to earlier forecasts of 3.7% for the current year 2022 and 2.8% in 2023, respectively.

In U.S. economic news, a report released by the Labor Department showed first-time claims for U.S. unemployment benefits rose by more than expected in the week ended June 4th.

The data said initial jobless claims climbed to 229,000, an increase of 27,000 from the previous week's revised level of 202,000. Economists had expected jobless claims to rise to 210,000 from the 200,000 originally reported for the previous week.

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