Tuesday's Consumer Price Index (CPI) report showed that inflation is still a concern and is up in some sectors, with some decline from 0.5% in January to 0.4% in February. Headline inflation still continues to decline from 6.4% year-on-year in January to 6% in February. Core inflation also remains elevated at 5.5% year-on-year from 5.6% in January. Housing, which includes mortgages and rent, accounted for more than 70% of CPI growth in February.

The CPI report implies that the Federal Reserve will likely raise rates by a quarter point at its next FOMC meeting on March 21 and 22.

According to the CME FedWatch tool, there is an 81.9% chance of a 25 basis point rate hike and an 18.1% chance that the Fed won't raise rates.

It can be noted that before the release of inflation news, according to the FedWatch tool, the probability that the Fed will not raise rates this month was 35% versus 0% a week and a month ago.

The banking crisis that was reported this weekend further aggravates the Fed's ability to bring inflation down and keep the country from falling into recession.

Continued rate hikes by the Federal Reserve will create bearish sentiment for the precious metals markets. But higher inflation has the opposite effect. Together, these two forces work against each other: higher inflation pushes prices up, and rising interest rates pull prices down. And at the same time, raising rates strengthens the dollar.