Gold sinks to new 3-1/2-month low on mounting Fed rate hike bets.

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Gold prices extended overnight losses to touch the lowest level in almost four months during North America’s session on Thursday, amid growing expectations for a December rate hike by the Federal Reserve.
Gold for December delivery on the Comex division of the New York Mercantile Exchange fell to an intraday low of $1,254.00 a troy ounce, a level not seen since June 24. It was last at $1,255.65 by 9:40AM ET (13:40GMT), down $12.95, or 1.02%.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending October 1 decreased by 5,000 to 249,000 from the previous week’s total of 254,000. Analysts had expected jobless claims to rise by 3,000 to 257,000 last week.
First-time claims were the lowest since April, when initial applications for aid were at levels not seen since November 1973.
Market participants were focusing on Friday’s U.S. nonfarm payrolls report for further indications on the strength of the job market, as the Federal Reserve has indicated that future interest rate decisions will be data-dependent.
The consensus forecast is that the data will show jobs growth of 175,000 in September, following an increase of 151,000 in August. The unemployment rate is forecast to hold steady at 4.9%, while average hourly earnings are expected to rise 0.2% after gaining 0.1% a month earlier.
A strong nonfarm payrolls report would reinforce the view that a U.S. rate hike in December may be on the cards, after hawkish signals from senior Fed officials in recent weeks revived speculation of a rate hike before the end of the year.
According to’s Fed Rate Monitor Tool, investors are pricing in a 60% chance of a rate hike by December. November odds were at around 15%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.35% to 96.47 early Thursday, the strongest level since July 29.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Among other precious metals, silver futures for December delivery slumped 24.8 cents, or 1.4%, to trade at $17.44 a troy ounce, the weakest level since June 24.

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