Spot gold fell to $3,958.80 an ounce in early Friday trading, a decline of over 1%, while silver prices hit their lowest levels this year at $50.080. Despite a slight cooling in labor-related inflation—with the employment cost index rising 0.8% in the third quarter—the market remains hyper-focused on the Federal Reserve’s restrictive stance. The combination of resilient 3.4% GDP growth and persistent underlying inflation has complicated the outlook for monetary policy, keeping gold under heavy liquidation pressure.

Energy markets are reacting sharply to the maritime security threat, with Brent futures nearing $117.15 a barrel. The uncertainty surrounding energy supplies and the broader U.S.-Iran standoff is creating a geopolitical premium that, paradoxically, is hurting gold by fueling inflation expectations. Investors are moving away from precious metals as they weigh the risk of further Federal Reserve tightening against the backdrop of a weakening technology sector in equity markets. While lower Treasury yields typically provide a cushion for bullion, the current market climate has left gold and silver increasingly vulnerable to technical selling.