08:58 AM EDT, 06/03/2026 (MT Newswires) -- Gold prices fell early on Wednesday as the dollar rose to a two-month high after oil prices rose following fresh hostilities between the United States and Iran, renewing worries energy inflation will force central banks to raise interest rates.

Gold for July delivery was last seen down US$32.30 to US$4,487.60 per ounce.

The drop comes as oil prices rose for a third day on fresh hostilities between Iran and the United States. The Wall Street Journal reported Iran launched attacks on Kuwait and Bahrain and the United States attacked Iran's military ground control stations on Qeshm Island and struck at an empty oil tanker attempting to run its blockade of Iranian ports and load oil at Iran's Kharg Island.

"Gold trades lower as the market continues to take its cues from oil, with the latest rise in crude prices weighing on bullion through its inflationary impact. Higher energy costs have underpinned bond yields and the dollar while reducing expectations for Federal Reserve rate cuts," Saxo Bank noted.

The dollar rose to the highest since April 7, with the ICE dollar index last seen up 0.26 points to 99.48. Treasury yields also rose, with the U.S. two-year note last seen up 4.4 basis points to 4.094%.