What happened: Gold futures (GC=F) tumbled more than 2% on Tuesday to trade below $4,200 per troy ounce.

What's behind the move: The precious metal was under pressure as the US dollar index (DX-Y.NYB) rose ahead of a crucial Consumer Price Index report. The monthly CPI print may give investors clues about whether the Federal Reserve will keep rates steady this year or be forced to hike them in order to combat rising inflation.

"The [price] move is forcing investors with long-held bullish positions to reassess the outlook, particularly as higher inflation and tighter monetary policy create a less supportive environment for non-yielding assets," Ole Hansen, head of commodity strategist at Saxo Bank, wrote on Tuesday.

Read more: Gold price outlook: Will we hit $6,000 in 2026?

What else you need to know: As oil prices have risen due to the Iran war, precious metals have declined amid central banks around the world signaling a more hawkish stance to combat inflation.

Goldman Sachs analysts recently shifted their timeline for Fed rate cuts to mid-2027, given higher energy costs and a strengthening labor market.

Gold has fallen sharply since the Middle East conflict started, dropping by roughly $1,000, or about 21%. Meanwhile, silver (SI=F) futures have dropped approximately 30% over the same period.

On Tuesday, the United States said it carried out a retaliatory military strike near the Strait of Hormuz after Iran shot down one of its Apache helicopters.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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