Gold starts the week with a sharp decline as oil and interest-rate pressures intensify.

Gold prices fell sharply at the start of the new trading week as rising oil prices fueled inflation concerns and strengthened expectations for a tighter interest-rate policy from the U.S. Federal Reserve (Fed).

In early trading on Monday, gold prices fell by 2.6% to $4,170 per ounce, according to market data available in the morning hours.

Selling pressure on gold intensified amid rising oil prices. Oil prices increased following reports that U.S. President Donald Trump rejected Iran’s proposal to reopen the Strait of Hormuz to shipping and end the conflict.

Brent crude futures rose 2.6% to $107 per barrel, while WTI crude increased 1.5% to $94 per barrel.

The rise in oil prices has strengthened concerns that higher energy costs could increase production and consumer expenses, thereby adding to inflationary pressures.

At the same time, high yields on U.S. government bonds are also putting additional pressure on gold, which does not generate interest income. Investors are currently focusing on the future path of interest rates and the Federal Reserve’s upcoming policy decisions.

The Fed raised its benchmark interest rate by 25 basis points at its latest meeting, bringing the target range to 3.75%-4%. Since then, market participants have been closely watching upcoming rate decisions and developments in U.S. inflation.

Analysts say that continued high energy prices and expectations for a restrictive monetary policy could increase volatility in the gold market.