Gold prices tumbled Monday as a diplomatic impasse over the Iran war keeps energy costs elevated, adding to inflation pressures and bolstering expectations that the Federal Reserve will raise interest rates again next month.

In afternoon European trading, New York gold futures fell 3.1% to $4,189 a troy ounce, their lowest in more than seven weeks. Other precious metals followed suit, with silver futures dropping 4.7% to $61.78 an ounce and platinum down 2.6% to $1,731 an ounce.

Gold has traded in a relatively narrow range of around $4,300-$4,500 an ounce this month, well below its record high of nearly $5,600 an ounce reached in January.

Oil prices climbed after President Trump rejected Iran's truce proposal, with the conflict between Washington and Tehran soon entering its eighth month. Higher energy costs have added to inflation concerns, while rising Treasury yields have further reduced the appeal of noninterest-bearing assets.

The U.S. dollar also strengthened, making dollar-denominated commodities more expensive for overseas buyers.

Fed officials earlier this month voted unanimously to raise their benchmark interest rate by a quarter percentage point. Traders see about a 70% probability of a hike in October, according to the CME Group's FedWatch tool.

Investors will now turn to a busy slate of U.S. economic data this week, including job openings, the ADP employment report, personal-consumption expenditures and nonfarm payrolls, for clues on the Fed's next policy move.