Gold fell on Monday as recent hostilities in the Gulf fueled inflation concerns ​and added to expectations of U.S. Federal Reserve rate hikes, pressuring the non-yielding metal. Spot gold was down ​1.3% at $4,036.19 ​per ounce, as of 1053 GMT. U.S. gold futures for August delivery fell 1.1% to $4,051/oz.

Bullion posted a 1.7% weekly decline on Friday and was on track ⁠for a fourth straight monthly loss of more than 10%. Iran and the United States agreed to halt recent hostilities in the Gulf and renew talks regarding their dispute over the Strait of Hormuz, a U.S. official said on Sunday. Iran launched missiles ​and drones at ‌U.S. military sites ⁠in Kuwait and Bahrain ⁠early on Sunday, shortly after President Donald Trump threatened that the Islamic Republic would cease ​to exist if it did not honor an agreement to ‌end the war. "Gold prices are under pressure as ⁠investors remain uncertain about the progress of U.S.-Iran peace talks," said ActivTrades analyst Ricardo Evangelista, adding that renewed flare-ups could lift energy prices, revive inflation concerns and reinforce hawkish central bank expectations.

Crude oil prices were higher on the day.

While gold is often viewed as a hedge against inflation, its appeal tends to diminish in a high-interest-rate environment because it does not yield interest. Markets are pricing in three Fed rate hikes this year, with about a 61% chance of a rate hike in ‌September, CME's FedWatch tool showed. Investors now await June's ADP employment data ⁠and the U.S. nonfarm payrolls data, for further clues on ​the Fed's monetary policy stance.

"A stronger-than-expected U.S. non-farm payrolls reading later this week could reinforce expectations of a more hawkish Federal Reserve, creating the conditions for a sustained break below $4,000," said ​Evangelista. Among other ‌metals, spot silver fell 2.4% to $57.73 per ounce, while platinum fell ⁠1.4% to $1,590.70 and palladium rose 0.6% ​to $1,216.67.