Tehran (ISNA) - Spot gold fell 0.4% to $4,103.23 per ounce, marking a 1.7% decline over the week. US gold futures for August delivery settled 0.7% lower at $4,113.70 per ounce.

Bart Melek, head of commodity strategy at TD Securities, noted that a major driving factor behind the drop has been the resumption of geopolitical tensions between Iran and the United States. He explained that investors are currently showing less appetite for holding safe-haven gold and silver, prompting the precious metal to drift toward the $4,100 threshold.

Meanwhile, oil prices posted a weekly gain on Friday due to supply concerns amid the recent US military aggressions against Iran. Higher energy prices have exacerbated inflation anxieties, reinforcing market expectations that central banks will push for higher interest rates.

"All signs point to market anxiety regarding inflation, particularly since oil prices ticked up again over the past few days," Melek stated. "This environment keeps central banks, especially the US Federal Reserve, highly cautious."

According to the CME FedWatch Tool, traders are pricing in a 69% probability of a US interest rate hike in September. While gold is traditionally viewed as an inflation hedge, elevated interest rates tend to weigh heavily on the non-yielding asset.

According to a Reuters report, investors are closely awaiting upcoming inflation data next week, alongside the congressional testimony of the newly appointed Federal Reserve Chair, Kevin Warsh, to glean clearer insights into the future trajectory of US monetary policy.

In physical markets, gold traded at a significant discount in India last week. In contrast, demand remained steady in China after its central bank reported its largest monthly gold reserve increase in over two and a half years for the month of June.

In other precious metals trading, spot silver fell 0.7% to $59.56 per ounce. Platinum edged up 0.4% to $1,116.72 per ounce, while palladium gained 2.2% to close at $1,274.50 per ounce.