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Gold prices languished near three-week lows on Thursday after a larger-than-expected increase in U.S. private payrolls in July fuelled bets on more monitory policy tightening and boosted the dollar and bond yields.

FUNDAMENTALS

* Spot gold was little changed at $1,935.20 per ounce by 0100 GMT, trading near its lowest level since July 12 hit in the previous session. U.S. gold futures eased 0.2% to $1,970.90.

* The U.S. dollar index rose to a 4-week peak and benchmark 10-year Treasury yields were at their highest since November on Wednesday after data showed U.S. private payrolls rose by 324,000 jobs last month, more than an increase of 189,000 forecast by Reuters. [USD/] [US/]

* Even as markets on Wednesday largely brushed off Fitch's downgrade of the U.S. credit rating, investors said they expected long-term unease about the country's debt position, political polarisation and the global standing of the U.S. dollar.

* The U.S. dollar will hold its ground against most major currencies over the coming three months as a resilient domestic economy bolsters expectations interest rates will remain higher for longer, according to FX strategists polled by Reuters.

* Gold is often sought as a safe investment during times of financial and economic uncertainty but tends to lose its attraction when interest rates rise as it yields no interest.

* The Bank of England is expected to raise interest rates to a 15-year high on Thursday, though there is a risk of a repeat of June's surprise half-point increase as inflation remains the highest of the world's major economies.

* Russian miner Nornickel, the world's largest producer of palladium, said Asia had become the company's largest market in terms of revenue for the first time.

* Palladium prices fell 0.5% to $1,237.19 an ounce.

* Spot silver was down 0.1% at $23.72 an ounce and platinum dropped 0.4% to $917.74. Both the metals were at their lowest levels in about three weeks.