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Gold Futures Settle Lower As Dollar Rises On Rate Hike Bets

Gold futures settled lower on Thursday as the dollar climbed and Treasury yields rose amid rising expectations the Federal Reserve will remain aggressive with interest rate hikes in the coming months.

The dollar rose to a fresh 20-year high, riding on recent data and hawkish comments from Fed Chair Jerome Powell and other central bank officials.

Cleveland Fed President Loretta Mester said Wednesday that policy makers should raise rates beyond 4% and deliver no rate cuts in 2023.

In Europe, French central bank chief Francois Villeroy de Galhau said on Wednesday the European Central Bank should show determination with interest rate increases while also acting in an orderly and predictable way.

Investors are betting that the U.S. Federal Reserve and the ECB will both raise their key borrowing costs by 75 basis points when they meet later this month.

The dollar index, which rose to 109.98 around mid-morning, subsequently pared some gains but still remained firm around 109.60, up nearly 0.85% from the previous close.

Gold futures for December ended lower by $16.90 or about 1% at $1,709.30 an ounce.

Silver futures for December ended down $0.216 at $17.666 an ounce, while Copper futures for December settled at $3.4065 per pound, down $0.1120 from the previous close.

Disappointing manufacturing data out of Europe and Asia has added to worries about the potential for a global recession.

The Labor Department released a report this morning that showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 27th.

The report showed initial jobless claims edged down to 232,000, a decrease of 5,000 from the previous week's revised level of 237,000.

The dip came as a surprise to economists, who had expected jobless claims to inch up to 248,000 from the 243,000 originally reported for the previous week.

A separate report released by the Institute for Supply Management showed its reading on U.S. manufacturing activity remained at a two-year low in August.

The ISM said its manufacturing PMI came in at 52.8 in August, unchanged from July. Economists had expected the index to edge down to 52.0.

While the index remained at its lowest level since hitting 52.4 in June 2020, a reading above 50 still indicates growth in the manufacturing sector.

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