@dominion451 saw the Monster Reaction roll, which I initially forgot to hide. It was very not good in the party’s favor. That was most likely another fight the party couldn’t afford to have.
Luckily, the module specifically states if gnolls are rolled up in a random encounter they come with certain rules I must abide by in the module, Rules as Written, one of which is that they had a 75% chance of being willing to negotiate for treasure rather than battling to the death, which they will do as well.
Unfortunately the party had little of value the gnolls would care about aside from the jeweled dagger. I felt having the gnolls take the dagger was feasible. Forcing Eltrezar to give the dagger willingly was a bit nasty of me, I admit, but also enjoyed.
I originally planned for Eltrezar to watch the gnoll start plucking jewels from the hilt with a rusty steak knife, ruining the dagger for sure, and likely damaging the stones they’re interested in as well, but that just seems egregiously dickish.
So the dagger stays intact, and I’ll even toss in a very minor clue as to where it might be reclaimed. Not a great clue, just a enough for a tiny flame of hope to torment the wizard. That’s what a benevolent DM does…