Gold fell more than one percent in early Asian trade on Monday, as fears of a closure of the Strait of Hormuz led to a sharp rise in oil prices, reviving expectations of interest rate hikes to combat inflationary pressures.

Price updates

Spot gold fell 1.2% to $4,072.78 per ounce by 0050 GMT. U.S. gold futures for August delivery fell 0.8% to $4,081.70.

The declines in the yellow metal came hours after the U.S. Central Command announced a new round of strikes against targets inside Iran, saying it aimed to undermine Tehran's ability to attack commercial vessels in the Strait of Hormuz.

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As a result, oil prices jumped about four percent, the dollar rose, and Asian stock markets fell as fighting intensified in the Gulf region.

Attention this week will focus on the first semiannual testimony before Congress by Federal Reserve Chairman Kevin Warsh, along with a set of key U.S. economic data such as the Consumer Price Index, Producer Price Index, and retail sales data for June, in search of new signals on the economy, inflation, and monetary policy expectations.

The Fed said on Friday in its monetary policy report to Congress that inflation in the United States 'has increased further this spring, as the growing impact of tariffs and the rise in energy costs linked to the war and the boom in artificial intelligence development have exacerbated price pressures that took hold last year.'

Gold traded at a steep discount in India last week due to price volatility, while demand in China remained stable, with the People's Bank of China in June reporting its largest monthly increase in gold reserves in more than two and a half years.

Among other precious metals, spot silver fell 1.6% to $58.89 per ounce, platinum declined 1.1% to $1,610.22, and palladium dropped 1.3% to $1,260.15.