Gold prices deepened their losses during today's trading, with the ounce falling 1.5% to $4,087.70, amid rising bets on U.S. interest rate hikes and continued oil price increases due to escalating war in the Middle East, which heightens concerns over worsening inflationary pressures, as investors await the Federal Reserve's meeting next week.

Although investors widely expect interest rates to remain unchanged at the next meeting, markets still price in a 77% chance of a hike in September, according to the CME FedWatch tool.

The dollar index, which measures the performance of the U.S. currency against a basket of six major currencies, rose slightly by 0.15% to 101.24 points.

Escalating Tensions

Gold prices had retreated today from their highest levels in two weeks, amid escalating tensions in the Middle East and rising oil prices.

Spot gold stabilized at $4,132.01 per ounce, after rising to $4,165.87 in the previous session, which was its highest level since July 7.

U.S. gold futures for August delivery fell 0.4% to $4,134.60.

As for other precious metals, spot silver rose 0.3% to $59.90 per ounce, platinum increased 0.7% to $1,656.24, and palladium rose 0.8% to $1,301.25.