Gold falls 3.5%, closes at nearly two-month low

Gold futures tumble 3.5% to their lowest closing level since early August as higher oil prices fuel concerns over tighter monetary policy.

Gold prices fell on Monday, with the most-active gold futures contract settling at its lowest level since Aug. 4, pressured by risks of tighter monetary policy stemming from the energy supply shock.

Oil prices continued to rise during Monday's trading after the US rejected an Iranian proposal involving an agreement to reopen the Strait of Hormuz. However, crude futures pared most of their gains after reports that Iran's foreign minister would meet with mediators in New York to discuss resuming talks with Washington.

Meanwhile, the dollar and sovereign bond yields in Europe and the US rose, weighing on precious metals as investors awaited the release of the Federal Reserve's preferred inflation gauge and the US jobs report later this week.