LONDON, Oct. 4 -- The US private-sector data that arrived on Thursday sent a clear message to gold dealers in London: the Federal Reserve is not finished yet. S&P Global's flash composite PMI for September printed at 54.4, well above the 52.0 consensus, and money-market pricing on a Fed rate increase in October jumped above 70 per cent before New York opened. By the time the LBMA afternoon fix settled, 24-karat gold in London had slipped to £103.93 per gram, a £0.10 retreat from Wednesday's close and the third consecutive session of declines.

The dollar index climbed above 104, its best reading since late August, as bond yields rose in sympathy with the repriced Fed outlook. Sterling edged up to 1.3347 against the dollar, offer...