Gold continued its losses on Friday, after falling by about 2 percent in the previous session, amid renewed rise of Brent crude above the $100 per barrel level, which raised concerns about inflation and reinforced expectations of an interest rate hike ahead of the Federal Reserve's meeting next week.

Spot gold price fell 0.5 percent to $4,027.54 per ounce by 05:23 GMT, retreating more than $130 from its two-week high recorded on Wednesday. U.S. gold futures for August delivery also fell 0.5 percent to $4,029.60 per ounce.

Despite these losses, gold is still on track for slight weekly gains of about 0.3 percent.

Brian Lan, managing director of GoldSilver Central, said: 'We expect more volatility in the near term. Gold is currently trading within a range of $3,980 to $4,170, and has remained confined within this range for weeks. Every time prices approach the $4,000 level or dip slightly below it, we see a strong return of buyers.'

U.S. President Donald Trump had threatened on Thursday Iran and its Houthi allies with 'major military punishment'.

Brent crude jumped 7 percent on Thursday, exceeding the $100 per barrel level for the first time since May, in one of the fastest upward surges since the outbreak of the war.

The rise in oil prices heightened concerns about the return of inflationary pressures, reinforcing expectations that interest rates will remain high for longer. Although gold is traditionally considered a hedge against inflation, its appeal diminishes in an environment of high interest rates, as it is a non-yielding asset.

Investors are also awaiting the Federal Reserve's meeting next week, where expectations broadly point to keeping interest rates unchanged. However, markets are pricing in a probability of a rate hike in September at about 81 percent, according to the 'FedWatch' tool.

In Europe, the European Central Bank kept interest rates unchanged, as expected, but left the door open for a new hike in September.

Among other precious metals, spot silver fell 0.4 percent to $57.48 per ounce, but it is still on track for weekly gains of about 3 percent.

Platinum also fell 0.9 percent to $1,585.50 per ounce, and palladium dropped 1.5 percent to $1,238.55, with both metals heading for weekly losses.

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