Gold Rebounds After Early Plunge as Middle East Tensions, U.S. Shutdown Fears Mount

Gold prices reversed an early sharp decline on January 29, 2026, recovering amid escalating Middle East geopolitical risks and renewed concerns over a potential U.S. government shutdown. Spot gold climbed back to $1,985/oz after briefly dipping below $1,950 earlier in the session. Investors flocked to the safe-haven asset as regional conflict flared and congressional budget negotiations stalled. Market-implied odds of a partial federal shutdown by February 7 rose to 42%, according to Bloomberg data. The dollar index fell 0.6%, easing pressure on dollar-denominated bullion. Analysts note gold’s resilience reflects its dual role as both inflation hedge and crisis buffer. “Geopolitical fractures override short-term rate expectations,” said Maria Chen, commodities strategist at Horizon Capital.