Gold Recovers From Early Nosedive Amid Middle East Crisis, U.S. Shutdown Concerns

(RTTNews) - After plummeting early in the session, the price of gold showed a substantial recovery over the course of the trading day on Thursday as investors assessed growing Middle East escalation and the efforts by U.S. Congressional leaders to avert a partial government shutdown.

Front Month Comex Gold for February delivery edged higher by $14.80 (or 0.28%) to $5,318.40 per troy ounce after plunging as much as $206.10 (or 3.89%) to a low of $5,097.50 an ounce.

Notably, this is a new record closing high for gold, which has increased for eight consecutive sessions.

Front Month Comex Silver for February delivery also climbed by 87.50 cents (or 0.77%) to $114.037 per troy ounce.

U.S. President Donald Trump has warned Iran that time is running out for a nuclear deal and added that Iran would face harsher military attacks than last June if it fails to agree to talks.

Iran's recent violent suppression of anti-government protests and the reported resumption of its nuclear program has forced Trump to go on the offensive.

However, Iran rejected any talks induced by coercive threats and vowed to strike back "immediately and powerfully" against any possible attack by the U.S.

If Israel joins with the U.S., and Lebanon's Hezbollah and Yemen's Houthis support Iran, a long and full-blown war could become inevitable.

The Middle East is jittery as any U.S. action could also turn Iran against its neighboring nations if Iran considers them complying with the U.S.

In the U.S., the funding to run the government expires on Friday, January 30, 11:59 p.m. E.T.

Crucial talks between Democrats in the Senate and members of U.S. President Donald Trump's administration over a federal funding bill to avert a partial government shutdown are ongoing.

Yesterday, Senate Majority leader John Thune indicated that the door is open for discussion but emphasized that the onus would be on the Democrats to reached a deal with the White House.

A few Democrats have already hinted at not allowing a funding bill if it includes financing for the the Department of Homeland Services. Their hard stance follows the public anger after Immigration and Customs Enforcement agents killed two U.S. citizens in Minneapolis.

Democrats have been arguing the DHS receives very liberal funding and hence are pushing to separate it from the wider spending bill.

The London-based World Gold Council today predicted strong demand for gold will continue in 2026 as economic and geopolitical instability are still causes for concern.

The WGC reported that total gold demand hit a record 5,002 tonnes in 2025, up from 4,961.9 tonnes in the previous year. Investment demand, (exchange-traded funds and bars and coins) shot up by 84% to 2,175.3 tonnes from 1,185.4 tonnes in the previous year.

After cutting interest rates three consecutive times late last year, yesterday the U.S. Federal Reserve kept rates unchanged in a range of 3.50% to 3.75%. This pause was widely expected by market participants.

The FOMC indicated that economic activity is expanding at a solid pac,e while the unemployment rate is showing signs of stabilization.

Last month, while outlining the central bank's policymaking, the Fed's "dot plot" graph hinted at only a one quarter-point rate cut in 2026 followed by another in 2027.

Traders are betting on only around a 13.4% chance of a quarter-point rate cut by the Fed at its March meeting.

Of note, during his press conference after the interest rate announcement, Fed Chair Jerome Powell downplayed the significance of the yellow metal's recent rally.

Powell also dismissed concerns over the "Fed's credibility" and also denied that the Fed was drawing any macroeconomic signals from investors' rush to pile up gold.

On the economic front, the U.S. Labor Department revealed that initial jobless claims inched lower by 1,000 to 209,000 in the week ended January 24 from an upwardly revised 210,000 in the previous week.

Continuing jobless claims decreased to 1,827,000 for the week ending January 17 from 1,865,000 of the previous week.

The U.S. dollar index was last seen trading at 96.27, down by 0.17 points (or 0.18%) today.