June 25 (Reuters) - Gold prices extended losses on Thursday, hovering near the more-than-seven-month low hit a day earlier, as the dollar held firm on rising expectations of Federal Reserve interest rate hikes.

FUNDAMENTALS

* Spot gold XAU= was down 0.4% at $3,985.89 per ounce, as of 0043 GMT, after hitting its lowest level since November 2025 on Wednesday. U.S. gold futures GCcv1 for August delivery lost 0.2% to $4,001.60.

* Bullion fell below the key $4,000-per-ounce level for the first time since November 2025 on Wednesday, pressured by a stronger dollar and expectations of Fed rate hikes.

* Traders expect three Fed rate hikes this year and are pricing in an about 67% chance of a September increase, according to the CME FedWatch Tool. FEDWATCH/

* The U.S. dollar advanced for a third straight day on Wednesday to hit a 13-month high, making gold more expensive for buyers holding other currencies.

* U.S. Treasury Secretary Scott Bessent on Wednesday applauded Fed Chair Kevin Warsh's plan to reduce forward rate guidance, but said Fed policymakers need to keep an open mind on the inflation impact of the Iran conflict.

* Investors await the U.S. Personal Consumption Expenditures data, the Fed's preferred inflation gauge, due later in the day, for further cues on monetary policy.

* Lebanon and Israel are discussing a U.S.-backed proposal for Israeli forces to transfer some of the Lebanese territory invaded in their war with Hezbollah to Lebanon's military, officials on both sides said, in a possible step towards restoring Lebanese control of occupied territory.

* Spot silver XAG= fell 0.2% to $57.33 per ounce, platinum XPT= lost 0.2% to $1,575.85, while palladium XPD= gained 0.3% at $1,170.25.