Gold Prices Rebound After Sell-Off, Fed Policy in Focus

South Korean consumer inflation fell to a five-month low in January, reaching the central bank's annual target of 2.0%, according to data released Tuesday.

The benchmark consumer-price index rose 2.0% from a year earlier, down from 2.3% in December, the Ministry of Data and Statistics reported. This marked the lowest reading since August 2025 and came in below the 2.1% increase economists had expected.

Lower energy prices helped offset seasonal inflationary pressures from higher agricultural product prices ahead of the Lunar New Year holiday in mid-February, the ministry data showed.

On a monthly basis, consumer prices increased 0.4% in January, slightly below the 0.5% rise economists had forecast. In December, prices had risen 0.3% month-on-month.

Core CPI, which excludes volatile food and energy prices, rose 2.0% year-on-year in January and gained 0.5% from the previous month.

The Bank of Korea stated in its December policy report that it expects inflation to average 2.1% in 2026, unchanged from last year.

Source: Investing

Electric vehicles are likely to make up 85% of new car sales in the EU from 2035, based on its plans to drop an effective ban on new combustion-engine models, although that share could drop as low as 50%, clean transport advocacy group T&E said.

Under pressure from carmakers, the European Commission in December proposed a 90% cut in CO2 emissions in 2035 from 2021 levels, instead of zero for all new cars and vans.

T&E has criticised the EU's biggest retreat from its green policies in years, saying the proposals will allow continued sales of high CO2-emitting vehicles, while Chinese producers race further ahead in battery electric vehicles (BEVs).

The European Commission said in December that its plans would support sales of EVs in the EU and save vehicle makers 2.1 billion euros ($2.5 billion) over three years, freeing up resources for innovation and new electric models.

In a report published on Tuesday, T&E said carmakers could sell anywhere between 5% and 50% of non-BEVs after 2035, the lowest share based on a carmaker continuing to sell high emissions internal combustion engine cars, the highest share if it sells the most efficient extended-range plug-in hybrids.

T&E said the most likely figure was 15%, with sales of some combustion engine and some plug-in hybrid vehicles.

Together with an extended time period to comply with 2030 targets, the report said car CO2 emissions would be 10% higher between 2025 and 2050 than under current tighter rules.

T&E said there was also a risk of further weakening of rules when the proposals came up for debate in the European Parliament and in the Council, the grouping of EU governments.

Both will need to approve the changes.

($1 = 0.8474 euros)

Source: Reuters

Central Asia is quietly engineering a major shift in its energy landscape, moving out from under Russia's long-standing economic and energy shadow. A new wave of regional projects, coupled with strategic investments from Europe and China, is creating pathways for Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan to achieve greater energy independence from Moscow.

This strategic pivot is being driven by enhanced power grid connections, new transmission infrastructure, and a landmark program to establish the region's first integrated electricity market. According to Ukraine's foreign intelligence service, SZRU, these developments are steadily loosening Russia's grip on the region's energy sector.

While these nations remain cautious about openly criticizing Russia, their actions signal a clear intention to diversify. Recent resolutions of long-standing border disputes have paved the way for improved regional cooperation, opening the door for partnerships with global institutions like the World Bank and the European Union.

World Bank and EU Drive Regional Integration

A cornerstone of this transformation is the World Bank's 10-year Regional Electricity Market Interconnectivity and Trade (REMIT) Program. Approved with an indicative financing of $1.018 billion, REMIT aims to build Central Asia's first unified electricity market.

The program's ambitious goals over its three phases include:

• Boosting Electricity Trade: Increasing cross-border electricity trade to at least 15,000 GWh annually.

• Expanding Transmission: More than tripling transmission capacity to 16 GW.

• Integrating Renewables: Creating the infrastructure to support up to 9 GW of clean energy from hydropower, solar, and wind sources.

Najy Benhassine, World Bank Regional Director for Central Asia, noted the vast economic potential, stating, "By 2050, stronger electricity connectivity and trade could generate up to $15 billion in economic benefits for the region."

The European Union is also a key partner. The EU has elevated its relationship with Central Asia to a strategic partnership, committing a $14-billion Global Gateway investment package. This funding is designed to bolster transport links, digital connectivity, and cooperation on critical raw materials and energy.

Szymon Kardas, a Senior Policy Fellow at the European Council on Foreign Relations, identifies clean energy as "the most promising area for EU collaboration." He highlights that Central Asian countries, historically influenced by Russia and now seeing heavy Chinese investment, are eager to build stronger ties with Europe to access technology for their rich natural resources.

China's Expanding Economic Influence

As Russian influence recedes, China's presence is growing rapidly. Beijing has accelerated investments across Central Asia, signing numerous deals for joint ventures and corporate takeovers, with a strong focus on Kazakhstan's mining sector.

China's economic footprint is particularly pronounced in Uzbekistan. According to official Uzbek statistics, Chinese firms now represent more than a quarter of all foreign companies or joint ventures in the country. The number of Chinese-Uzbek ventures has more than doubled in the last two years, placing China far ahead of Russia as the top source of foreign-participation companies.

This evolving landscape presents Central Asia with a complex challenge: balancing its quest for energy security and economic diversification against the rising influence of China, all while navigating its delicate relationship with Moscow.

President Donald Trump on Monday voiced his support for an ongoing criminal investigation into Federal Reserve Chairman Jerome Powell, dismissing a Republican senator's threat to block his replacement nominee if the probe continues.

Speaking to reporters in the Oval Office, Trump said U.S. Attorney for Washington Jeanine Pirro, who is spearheading the unprecedented investigation, should "take it to the end and see."

The president's comments came in response to a question about whether Pirro should drop the case after Senator Thom Tillis (R-N.C.) declared he would oppose any new Fed nominee until the Powell investigation is resolved.

High-Stakes Confirmation Battle Looms

Tillis issued his ultimatum on Friday, the same day Trump announced Kevin Warsh as his choice to succeed Powell as Fed chair following a months-long selection process.

As a member of the Senate Banking, Housing, and Urban Affairs Committee, Tillis holds a key vote. The committee consists of 13 Republicans and 11 Democrats. If Tillis votes with all Democrats against Warsh, he could trigger a stalemate, preventing the nomination from reaching a full Senate vote.

A Probe Rooted in Policy Disagreements

Powell first disclosed on January 11 that he was under criminal investigation. The announcement followed months of public criticism from Trump and his allies, who have consistently attacked Powell for not lowering interest rates as aggressively as the president demanded.

Powell has framed the investigation as an administrative threat intended to undermine the central bank's independence. He stated that the Fed's rate-setting decisions were "based on our best assessment of what will serve the public, rather than following the preferences of the President."

The conflict has also focused on the Fed's Washington headquarters renovation. Trump has repeatedly suggested the multi-year, multi-billion-dollar project involves either corruption or mismanagement by Powell. "It's either gross incompetence or it's theft of some kind, kickbacks. I don't know what it is," Trump said Monday. "But Jeanine Pirro is incredible, and she'll figure it out."

The Federal Reserve has defended the renovation, stating it will lower long-term costs for the central bank and has sought to explain any cost increases. According to a CNBC report, the Fed had not yet complied with grand jury subpoenas issued as part of Pirro's probe.

Powell's term as Fed chair is set to end in May.

Copper is entering a “supercycle” of sustained high prices and could trade between 100,000 yuan ($14,385) and 150,000 yuan a ton this year in Shanghai, according to Li.

Source: Bloomberg

“The unwinding of the metals rally, especially in gold and silver, is driving the dollar’s strength,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc. “Weak and overleveraged hands are being shaken out and the dollar is getting all the benefit from it, since the move into metals was primarily driven by debasement considerations.”

Asset managers boosted their bearish dollar positioning just days before news of Warsh’s nomination triggered the greenback’s biggest gain since May. Month-end flows may have amplified the greenback’s rebound, according to Europe-based traders, particularly as the technical backdrop pointed to a corrective move.

What Bloomberg Strategists Say...

Source: Bloomberg