Spot gold dropped 1.5% to $4,264.70 per ounce

Gold fell over 1% to a more than two-month low on Tuesday tracking a ‌broader market sell-off and pressured by rising expectations of a U.S. interest rate hike this year, while investor focus turned to key inflation data due later this week.

Spot gold dropped 1.5% to $4,264.70 per ounce as of 1745 GMT, after declining more than 2% earlier in the session. Bullion dropped to ​its lowest level since March 23.

Traders are a little nervous with the market here. All markets across the board went ​into risk-off. And I think that risk-off right now is why you’re seeing a down in gold, ​said Bob Haberkorn, senior market strategist at RJO Futures.

The S&P 500 and the Nasdaq declined to over one-month lows on Tuesday.

Gold and silver remain under pressure until we get clearer guidance from the Fed, Haberkorn added.

After last ​week’s strong job numbers, focus has shifted to key inflation data this week, including the May U.S. ​Consumer Price Index print on Wednesday and Producer Price Index reading on Thursday, for more clues on the U.S. ‌monetary ⁠policy outlook.

Should the U.S. inflation data for May also surprise on the upside on Wednesday, the gold price is likely to fall further. This also increases the potential for a recovery later in the year, should, as we expect, the Fed not raise interest rates, Commerzbank said in a ​note.

Traders are pricing in about ​68% chance of ⁠a U.S. central bank rate hike in December, according to the CME FedWatch tool.

Oil prices dropped after Iran and Israel said they had halted attacks on each other following an ​appeal from U.S. president.

Higher crude can fuel inflation and keep ​interest rates ⁠higher for longer. While gold is seen as an inflation hedge, higher rates tend to weigh on the non-yielding metal.