• Gold prices tumbled more than 2% to $4,236.01 an ounce, marking the steepest single-day decline in weeks.
  • A strengthening U.S. dollar and rising real yields triggered a broad selloff in precious metals.
  • Traders are recalibrating expectations for Federal Reserve policy amid mixed inflation signals.

The precious metal slid sharply on Tuesday, with spot gold falling 2.3% to $4,236.01 per ounce by mid-afternoon trading in New York. The move erased gains from the prior session and pushed prices back toward the lower end of their recent range.

According to market participants, the selloff was driven by a sudden shift in currency markets. The dollar index climbed 0.6% against a basket of major currencies, making gold more expensive for overseas buyers. At the same time, yields on 10-year Treasury notes edged higher, reducing the appeal of non-yielding assets.

“The macro picture is shifting quickly,” said one metals trader at a European bank, asking not to be identified because they are not authorized to speak publicly. “We’re seeing a move away from havens as rate expectations get repriced.”

Gold had been hovering near the $4,400 level earlier this month, supported by concerns over sticky inflation and geopolitical tensions. But recent data showing resilience in the U.S. labor market and a pickup in manufacturing activity have fueled speculation that the Fed may hold rates higher for longer.

Federal Reserve Governor Michelle Bowman said in a speech on Monday that she still sees “upside risks to inflation” and that further rate hikes remain on the table if needed. Her comments added to the hawkish tone, prompting traders to pare back bets on rate cuts this year.

The pullback in gold also triggered technical selling, as prices breached key support levels. Chart watchers noted that a close below $4,250 could open the door to a test of the $4,200 area.

Despite the sharp decline, some analysts caution against reading too much into a single session. Gold has seen similar dips in past months only to rebound quickly.

“This is a typical profit-taking event in a market that has been overbought,” said a strategist at a Swiss bullion bank. “The longer-term narrative—central-bank buying, de-dollarization—remains intact.”

Other precious metals also suffered. Silver slid 3.8% to $31.85 an ounce, while platinum fell 1.9%.

Correction: An earlier version of this article misstated the percentage decline; gold fell more than 2%, not more than 3%.