Gold prices fell sharply on Friday, with spot gold dropping 1.2 percent to $4,054.86 an ounce, though it remained on track for its first monthly gain in five, rising nearly 2 percent in July. U.S. gold futures also declined 1.2 percent to $4,049.30. The decline came amid persistent uncertainty over the Federal Reserve's rate path and escalating Middle East tensions, including a drone strike on gas vessels at Egypt's Damietta port that heightened fears of a wider U.S.-Iran conflict. Traders are pricing in a 59 percent chance of a rate hike at the Fed's September meeting, according to the CME FedWatch Tool, while the dollar headed for its worst week in three months. Iran's Islamic Revolutionary Guard Corps claimed responsibility for destroying drone hangars and a fuel storage facility at the U.S.-operated Ali Al Salem airbase in Kuwait, vowing continued military actions until U.S. forces leave the region.