Gold held a loss as the US and Iran traded fire in the Persian Gulf on Monday, jeopardizing a four-week-old ceasefire and fueling inflation and rate-hike risks.

Bullion traded near $4,520 an ounce, after falling 2% on Monday. The US military said it fought off attacks from Iran as it facilitated the passage of two US-flagged vessels through the Strait of Hormuz. Adding to the tension, the UAE said it intercepted cruise missiles fired by the Islamic Republic and blamed an Iranian drone strike for a large fire at its Fujairah port.