– Gold prices slid ‌more than 1% on Monday as fears of a closure of the Strait of Hormuz drove oil prices sharply higher, reviving expectations of elevated interest rates to combat inflationary pressures from escalating hostilities in the Middle ​East.

Spot gold dropped 1.5% to $4,060.36 per ounce by 0541 GMT. U.S. gold futures for August ​delivery were down 1.1% at $4,068.30.

U.S. and Iranian forces have exchanged heavy missile ⁠and drone assaults, with Tehran targeting U.S. facilities in states across the Gulf on Sunday and saying ​it had again closed the vital Strait of Hormuz.

Oil prices jumped about 4%, the dollar and ​U.S. Treasury yields climbed, and share markets slipped in Asia.

“Any breakout of violence in the Gulf is accompanied by pressure on gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

“The question is, if the ​Strait of Hormuz remains effectively or partially closed, does that lead to a deflationary effect, ​further down the road, that might actually be supportive for gold if you have demand destruction leading to lower ‌economic ⁠activity,” Frappell added.

Kevin Warsh’s first semiannual testimony before Congress as Federal Reserve chair, along with a slate of key U.S. economic data, including June CPI, PPI and retail sales, will be closely watched this week for fresh clues on the economy, inflation and the monetary policy outlook.

Remarks from Fed ​policymakers, including Vice Chair ​Michelle Bowman and Governor ⁠Christopher Waller, later in the day are also in focus as they could provide insights on how inflationary pressures are affecting the central bank’s ​stance on interest rate hikes.

Traders are currently pricing in a 72% chance ​of a ⁠U.S. Fed interest rate hike in September, up from about 63% last week, according to the CME FedWatch Tool. FEDWATCH/ COMEX gold speculators trimmed their net long positions by 1,964 contracts to 114,854 in the ⁠week to ​July 7, data released on Friday showed, following three ​consecutive weeks of increases.

Elsewhere, spot silver declined 2.6% to $58.29 per ounce, platinum shed 1.6% to $1,601.92, and palladium fell 2% to $1,251.42

muz, one of the most important trade routes for global energy supplies.

US crude oil futures were up 4.1% at $74:33 per barrel as of 9:15 p.m. ET. Brent futures, the international benchmark, traded 3.88% higher at $78.96.

The US military launched another wave of strikes Sunday against Iran after hitting 140 targets on Saturday, according to U.S. Central Command. The strikes are in response to an attack by the Islamic Revolutionary Guard Corps on a container ship transiting Hormuz.

Iran responded Sunday with strikes on U.S. military facilities in Jordan, Kuwait, Bahrain and Oman, according to the state news agency Tasnim.

Iranian state media said the Revolutionary Guard had closed the Hormuz until further notice, but the U.S. military disputed that claim. Centcom said the strait was open to “all vessels seeking to lawfully transit.”

“U.S. forces are positioned and prepared to ensure that freedom of navigation remains available despite unwarranted Iranian aggression, harassment, threats, and arbitrary declarations,” Centcom said in a social media post Sunday. “Iran does not control the strait. Traffic is flowing.”

Petroleum Division issued a notification saying that prices of petroleum products had been hiked by the federal government.

Under the revised rates the petrol price has been increased by Rs13.18 per litre increasing the new price to Rs310.71 per litre.

The price of high-speed diesel (HSD) has also been increased by Rs13.80 per litre to Rs323.30 per litre.

Sources said that the petroleum charge on petrol has been increased by Rs9.36 per litre to Rs80 per litre from Rs70.36 per litre.

The amended prices will be effective from midnight and will be applied for one week, the announcement said.