Spot silver XAG= dropped 1% to $63.59 per ounce, platinum XPT= fell 1.4% to $1,716.52, and palladium XPD= slipped 0.7% to $1,304.50.
Analysts cite inflation and rate-hike pressure
"The lingering geopolitical uncertainty pushes oil prices higher, sustaining inflationary risks and pressure on the Fed to raise rates, boosting the dollar and compounding gold's headwinds," said Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com.
"The precious metal is caught in a structural tug-of-war between aggressive Federal Reserve repricing and currency debasement trends, fuelling ongoing volatility," Tzabouras added.
US-Iran tensions, dollar strength and Fed comments
The United States and Iran found themselves back on a war footing after the most significant exchange of fire in weeks, with Washington threatening even more devastating strikes, pushing oil prices to their highest in around a month O/R.
Concerns about the economic impact of the energy shock saw investors turn to the U.S. dollar, which hit a two-week high USD/. A stronger dollar makes greenback-priced bullion more expensive for buyers overseas.
Federal Reserve Governor Michael Barr said if inflation does not cool quickly, it will be time for the central bank to raise rates, echoing comments last week by Chair Kevin Warsh, who said the central bank will "have work to do" if policymakers don't get the confidence they need that inflation is heading down to 2%.
Traders are now pricing in a 68% chance of an interest rate hike at the central bank's policy meeting this month, the CME FedWatch Tool showed.
While gold is typically seen as an inflation hedge, higher interest rates tend to diminish the appeal of the non-yielding metal to investors.
The latest readings on the health of the U.S. economy come with the ADP employment report, due at 1215 GMT, and the nonfarm payrolls data on Friday.
Gold falls on dollar strength and inflation worries
Gold prices fell to their lowest in more than three weeks on Wednesday, weighed down by a stronger dollar as the biggest exchange of fire between Tehran and Washington threatened to fuel global inflation ahead of closely watched U.S. jobs data.
Spot gold XAU= was down 0.6% at $4,302.20 per ounce by 1007 GMT, after hitting its lowest level since August 7 earlier in the session, while U.S. gold futures GCcv1 for December delivery dropped 1.1% to $4,349.80.
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