Step 3 - Contraction, Fills and the Cut-Out
Go to Select>Modify>Contract by 3 or 4 pixels. Create a new layer and fill the selection with black.





Contract the circle selection again by 4 or 5 pixels. Choose the layer with the metal texture and press Ctrl+C to copy and Ctrl+P to paste. This should paste a circular cutout of the metal on a new layer on the top.




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