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.

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.