Gold prices fall as focus remains on the Middle East and interest rates

Iran and the United States exchanged new threats, with President Donald Trump warning that Iran would fail economically or face the elimination of its leadership if it did not reach an agreement, while the Iranian military said it would respond harshly to any new attack.

Oil prices fell on hopes that diplomatic efforts in the war on Iran would have a chance this week during a UN meeting, while investors focused on a partial recovery of oil shipments from Saudi Arabia despite ongoing Houthi attacks in Yemen.

The prospect of a new global cycle of monetary policy tightening is looming, with some of the world's largest central banks raising interest rates and indicating that more increases may be needed to curb inflation fueled by the war on Iran.

The Bank of Japan became the latest major central bank to tighten its monetary policy on Friday, after the Federal Reserve (U.S. central bank) raised interest rates earlier last week and the European Central Bank the week before.

Although gold is usually seen as a hedge against inflation, high interest rates can limit demand for it as they increase the attractiveness of income-generating assets.

For other precious metals, silver rose 0.2% to $66.37 per ounce in spot transactions, platinum fell 0.1% to $1798.31, and palladium rose 0.6% to $1309.65.