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Gold prices lingered at a three-week trough on Thursday, pressured by rising U.S. dollar and Treasury yields amid worries that the Federal Reserve will persist with sharp rate hikes.

FUNDAMENTALS

* Spot gold inched down 0.1% to $1,627.04 per ounce, as of 0049 GMT. Prices earlier hit their lowest level since Sept. 28 at $1,624.98.

* U.S. gold futures were down 0.1% at $1,632.60.

* The dollar index held steady, having risen 0.8% on Wednesday, while the benchmark 10-year Treasury yields hit a peak since mid-2008. [USD/]

* U.S. economic activity expanded modestly in recent weeks, although it was flat in some regions and declined in a couple of others, the Fed said on Wednesday in a report that showed firms growing more pessimistic about the outlook.

* With latest data showing inflation continuing to run at more than three times the central bank's 2% target, the report may do little to temper expectations for a fourth straight 75-basis-point rate hike next month.

* While gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the bullion, which yields nothing.

* Euro zone consumer inflation was marginally lower in September than estimated earlier, data showed on Wednesday, but still at a record high, underlining market expectations of more rate rises before the end of the year.

* Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 6.08 tonnes on Wednesday, their biggest one-day outflow since July.

* Spot silver fell 0.4% to $18.36 per ounce, platinum dropped 0.6% to $878.52 and palladium slipped 0.6% to $1,988.78.

DATA/EVENTS (GMT)

0115 China Loan Prime Rate 1Y, 5Y Oct

0645 France Business Climate Mfg, Overall Oct

1230 US Initial Jobless Clm Weekly

1230 US Philly Fed Business Indx Oct

1400 US Existing Home Sales Sept