Gold held a decline near $4,425 an ounce after stronger-than-expected US payrolls data and escalating Middle East tensions raised prospects for a Federal Reserve interest-rate hike as early as the Sept. 15-16 meeting. US job growth surged in August with the unemployment rate steady, bolstering the case for higher rates. A stronger dollar made gold more expensive for many buyers, while traders priced in a roughly 60% likelihood of a September increase. Higher borrowing costs typically undermine bullion, which pays no interest.

Adding to inflation fears, Iran said it targeted three oil tankers in the Strait of Hormuz and US-linked ships in retaliation for American attacks. Oil prices climbed, with benchmark Brent crude near $97 a barrel. Hebe Chen, senior analyst at Vantage Markets in Melbourne, said gold is being pulled into another macro storm, citing surging oil, elevated Treasury yields, and a stronger Fed-hike case.

Since rebounding from a floor near $4,000 in July, bullion has traded in a narrow range around $4,400. Consumer price data due this week will provide vital clues on the Fed's decision. Chen warned another firm inflation print could crack the $4,400 defense, while softer data may offer only a temporary reprieve. Spot gold was 0.1% lower at $4,425.37 an ounce in Singapore; silver was little changed at $66.24.