Spot gold dropped 1.29% to $4,086.90 an ounce in early Thursday trading, while silver tumbled 3.57% to $55.790. The sell-off follows reports of renewed attacks on commercial shipping in the Strait of Hormuz, which pushed Brent crude above $112.00 a barrel. While geopolitical instability typically bolsters precious metals, the resulting spike in energy prices has intensified concerns regarding long-term inflation, reinforcing the case for a restrictive monetary policy.
Gold and Silver Retreat as Oil Surges on Strait of Hormuz Attacks
Escalating conflict in the Strait of Hormuz has sent crude oil prices climbing, forcing gold and silver into a sharp decline. Despite a reprieve in Treasury yields, markets are prioritizing inflation fears over traditional safe-haven demand as traders brace for potential Federal Reserve tightening before the year ends.
Economic data released Thursday further complicated the outlook for bullion. Weekly initial jobless claims fell to 194,000, signaling a resilient labor market that remains unfazed by high borrowing costs. This performance suggests the Federal Reserve has little reason to pivot, with traders assigning an 86% probability to a 25-basis-point rate hike in December. Although the 10-year Treasury yield dipped toward 5.0%, the rally in crude oil and a firm U.S. dollar continue to trap precious metals in a cycle of heavy selling pressure.
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