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Silver also sets new record highs as Fed rate cuts bets are backed by inflation data. Gold records new highs
The price of gold hit a new record on Tuesday as U.S. inflation data fueled bets that the Federal Reserve will cut rates this year. As of 11:21 am, spot gold rose 0.4% to $4.609.69 an ounce. ET (1621 GMT), after a session high of $4634.33. U.S. Gold Futures for February Delivery rose by 0.1% to $4 617.90. David Meger said that the CPI data was a factor in the slight 'positive' tone in the market. This is because the CPI data indicates a greater likelihood of future Fed rate cuts. The core Consumer Price Index for the U.S. The core Consumer Price Index increased 0.2% from one month to the next and 2.6% annually in December, but fell short of analyst expectations for 0.3% and 2.7% respectively. Trump reiterated after the inflation figures his desire to reduce interest rates "meaningfully". Investors expect the Fed to maintain rates at its meeting on January 27-28, but they are currently expecting two rate cuts in 2018. Low interest rates are generally favorable for non-yielding gold. Meger said that fundamental factors such as geopolitical tensions, questions about Fed independence and concerns over the Fed's independence continue to support gold as a safe haven. Concerns about the independence of the Fed grew when Trump opened a criminal probe into Fed Chairman Jerome Powell, drawing criticisms from former Fed Chiefs and global central banks. Trump has also threatened a 25% tariff for countries that trade with Iran. This could reopen old wounds between Beijing and Tehran, which is Tehran's main partner. Overnight, Russia also attacked cities in Ukraine with missiles. Commerzbank has raised its gold forecast for 2026 to $4,900. CME Group announced on Monday that it would adjust the margins for precious metals to reflect market volatility. Spot silver, which had earlier reached an all-time session high of $89.10, gained 4.7% and is now trading at $88.90 per ounce. "Despite technical indicators screaming a correction, traders still favor bullish options for?silver )... despite the high volatility environment," said Hugo Pascal a precious metals dealer at InProved. Palladium increased 1.5% and spot platinum by 0.1%, to $1,870 an ounce. (Reporting and editing by Vijay Kishore, Krishna Chandra Eluri, and Anmol Choubey from Bengaluru)
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Microsoft announces initiative to reduce data center power costs and water usage impact
Microsoft announced on Tuesday a plan to reduce water consumption at its U.S. Data Centers and the potential impact of rising power prices on the general public. Politicians?across America?are urging an expansion of the data-center?capacity?and new energy production in order to keep the U.S. competitive in AI. Local communities, however, are concerned about the impact of the energy-hungry data centers on their utility bills, and how they will use water, land and other resources in the area. Microsoft has said that it will pay high utility rates to cover its power costs, and work with local utilities when necessary to increase supply for its data centers. It also promised to replenish more than the water its data centers use. The company said it would begin publishing information on?water consumption for each region of data center in the U.S. along with its progress towards replenishment. Brad Smith, Microsoft Vice Chair and president, said that it was unfair and unrealistic to ask the public to pay for additional electricity costs for AI. The company failed to respond to an inquiry seeking details about its financial initiative. Donald Trump, the U.S. president, said that ahead of the announcement on Monday, the tech giant will make "major" changes to its AI infrastructure plans in order to reduce data center power costs for Americans. "Data centers will be key (to the U.S. AI Boom) but big tech companies that build them have to 'pay for themselves'. Microsoft deserves congratulations. "More to come very soon," Trump wrote in a post on social media. Trump faces increasing pressure from the public to reduce rising costs of living ahead of this year's midterm elections. CNBC reported in November that Microsoft had withdrawn its plans to build a new data center in Wisconsin due to opposition from local residents. As part of its investment, the company announced on Tuesday it would support a new rate structure to prevent power costs for data centers from being passed onto consumers. Microsoft will also provide AI literacy to local communities, and train residents to fill jobs in its data centers. Reporting by Deborah Sophia, Bengaluru. Editing by Shilpa Majumdar and Sriraj Kalluvila.
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The Ukrainian parliament has blocked Zelenskiy as energy minister
Denys Schmyhal, the outgoing chief of defence in Ukraine, was not approved as Energy Minister by Ukrainian lawmakers. This is a rare rebuke to President Volodymyr Zelenskiy who is attempting to shake up important sectors at this critical time in the war against Russia. Shmyhal was appointed by Zelenskiy, the former prime minister, to "steer" an energy sector hampered by allegations of corruption and Russian attacks on infrastructure. Last year, the last permanent energy ministry was dismissed in a corruption scandal that implicated also her predecessor. Shmyhal’s appointment failed to receive the 226 votes needed, with only 210 legislators voting for it and three opposition parties abstaining. The job was proposed as part of an extensive government reshuffle, with Kyiv under increasing Russian pressure in the run-up to the fourth anniversary next month of Moscow's invasion. Some opposition legislators had criticised this wartime reshuffle before Tuesday's session. Solomiia bobrovska, who is a member of the liberal opposition Holos Party and sits on the national defence committee in parliament, believes that replacing Shmyhal would be disruptive for a ministry which still needs to "build its own strength". Holos was one of the parties to abstain. (Reporting and writing by Yuliia Dyesa, Dan Peleschuk; Editing by Andrew Cawthorne & Peter Graff).
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India proposes annual revisions of industrial output weights in order to reflect economic changes
A government discussion document stated that India was considering revising the weights used in calculating its Index of Industrial Production to "better reflect" changes to the economy. The proposal is part of a larger federal "push" to overhaul key economic data by updating methods and revising base-years in order to better reflect the current economic structure. In May, the IIP will change its base year from 2011-12 to 2022-2023. In India's 2011-12 IIP, manufacturing is about 78% of the base. Mining is 14%, and electricity is 8%. This reflects their respective shares in industrial activities. The Statistics Ministry proposes to replace the current fixed-base methodology with a chained-based method that would update industry and sector weights every year. The paper stated that 'the current system is less representative of industries as they grow, shrink, or emerge. It also said the mismatch could create substitution bias, which can distort estimates of growth. India's IIP would be aligned with international best practices if it used a chain-linked indicator, as is done by the U.S.A., Britain, and other members of the European Union. According to the proposal, the Ministry would review sector weights annually for mining, manufacturing?and electricity using the most recent national accounts data. The?paper stated that it would update industry-level weighings using the Annual Survey of Industries. The paper highlights the risks associated with this approach. Chain-linked indexes are not additive, so the sub-indices can drift in periods of high volatility. The paper stated that each monthly index will?undergo at least three revisions following the release of quick estimations before finalisation. By January 25, the government is inviting comments and suggestions. Last year, the government proposed a revision of the IIP compilation. It removed closed factories and replaced them with operational units in order to improve accuracy and conform with international standards.
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World Bank predicts a resilient global economy in 2026 despite tariffs, but with fading dynamism
The World Bank said that the global economy has proven to be more resilient than anticipated, and 2026 GDP growth will likely improve slightly compared to forecasts made in June last year. However, it warned that growth was too concentrated in developed countries, and too weak overall to reduce extreme poverty. World Bank's Global Economic Prospects Report shows that the global output will grow at a slower pace this year, from 2.7% to 2.6% in 2025. It will then return to 2.7% by 2027. The 2026 forecast for GDP is two-tenths a point higher than the previous predictions made in June. In 2025, growth will be four-tenths a point above the prior forecast. World Bank says that two-thirds (or about a third) of the upward revision is due to the better-than expected growth in the U.S., despite tariffs-driven trade disruptions. The World Bank predicts that the U.S. will grow by 2.2% in 2026 compared to just 2.1% in 2025, an increase of two tenths. The World Bank stated that after an import surge to beat tariffs in early 2025 held back U.S. economic growth, larger tax incentives would aid growth in the following year. The global lender warned that if current forecasts prove accurate, the 2020s will be the slowest decade of global?growth in the past 50 years. This is too low to prevent stagnation and unemployment among emerging markets and developing countries. Indermit Gil, World Bank chief economist, stated in a press release that "with each passing year the global economy is less able to generate growth and appears more resilient to uncertainty of policy." "But the divergence between economic dynamism, resilience and public finance cannot last for long." Gill said that the global GDP per capita in 2025 would be 10% higher than it was on the eve COVID-19, marking the fastest recovery since a major crisis in 60 years. He said that many developing countries were being left behind. A quarter of them had lower incomes per capita than in 2019. This was especially true for the poorest countries. CHINA'S ECONOMIC GREENHOUSE GROWTH IS EXPECTED SLOWDOWN The growth rate in emerging markets and developing countries will be 4.0% by 2026, down from 4.2%. This is a two-tenths or three-tenths point decrease compared to the June forecasts. The World Bank stated that the growth rate of this group in 2026, excluding China, will remain at 3.7%. This is unchanged from the previous year. China's economy will grow at a slower rate of 4.4% by?2026, down from 4.9%. However, the forecasts have both increased four-tenths a percentage points from June because of fiscal stimulus and increased exports. The World Bank stated that the growth in the Eurozone will slow from 1.4% to 0.9% by 2026 due to U.S. Tariffs, but recover to 1.2% by 2027 thanks to increased European defense spending. The outlook for Japan is the same in 2026. Growth will slow to 0.8% from 1.3% growth in 2025. This was a year that was aided by exports being pushed up to the U.S. ahead of tariffs imposed by President Donald Trump. The World Bank stated that slower consumption and investments in Japan would keep the GDP growth at 0.8% by 2027. (Reporting and editing by David Lawder)
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Silver also sets new record highs as Fed rate cuts bets are backed by inflation data. Gold records new highs
Gold hit a new record on Tuesday as U.S. data on inflation fueled?bets that the Federal Reserve will cut rates this year. Meanwhile, persistent geopolitical and economic uncertainty drove demand for safe-haven assets. Silver also reached a new peak. As of 09:50 am, spot gold rose 0.8% per ounce to $4631.19 ET (1450 GMT) followed a session high of $4634.33. U.S. Gold Futures for February Delivery rose by 0.6% to $4641.30. David Meger said that the CPI data was a factor in the slight positive market tone. This is because the CPI data indicates a greater likelihood of Fed rate cuts in the near future. The U.S. core Consumer Price Index increased by 0.2% in December compared to the previous month and by 2.6% compared to December last year, which was below analysts' expectations for 0.3% and 2,7% respectively. Trump reiterated his call to reduce interest rates "meaningfully", after inflation data. Investors expect two rate cuts in this year, but the Fed is expected to hold rates steady at its meeting on January 27-28. Lower interest rates are generally favorable for non-yielding gold. Meger said that fundamental factors such as geopolitical tensions, questions about Fed independence and concerns over the Fed's independence continue to support gold as a safe haven. Concerns about the independence of the Fed increased after Trump opened a criminal probe into Fed Chair Jerome Powell. Former Fed chiefs as well as global central bankers criticized this move. Trump has also warned to slap 25% tariffs on countries that trade with Iran, putting Beijing at risk of reopening old wounds. Beijing is Tehran's main partner. Overnight, Russia also struck Ukraine's cities with?missiles or drones. Commerzbank has raised its gold forecast for 2026 to $4,900. CME Group announced on Monday that it would adjust the margin setting for precious metals in order to respond to market volatility. Spot silver, which had earlier reached a high of $89.10 per ounce, gained 4.7%. "Despite technical indicators screaming a correction, traders still favor bullish options for silver )... despite the high volatility environment," said Hugo Pascal a precious metals dealer at InProved. Spot palladium increased 1.8% and platinum by 1.9%, to $1,875.35 an ounce. (Reporting and editing by Vijay Kishore in Bengaluru, Anmol Choubey from Bengaluru)
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The Russian energy tax is calculated using the indicator oil price, which has fallen to a 79-month-low.
Data from the Russian government showed that last month, the indicative price of crude oil, used by it to calculate taxes payable by energy companies, fell to its lowest level since May 2020. This indicates a shrinking in state revenue. State energy revenues, mainly from the mineral extract tax calculated using the monthly average indicative price set up by the government, dropped?by 22 percent from January to November of 2025. They are on track to be at their lowest level since 2020. The Economy Ministry said that the 'indicative price' for December 2025 taxes would be $39 per barrel, down $45 from November. The price for the indicative blend is based on market prices of Russia's Urals oil and more expensive ESPO blends. Due to 'Western sanctions,' Russian oil is sold at a discounted price internationally. The average indicative price dropped to $55.60 per barrel in 2025 from $67.90 a year earlier, which is below the $58 budgeted. The budget for 2026 was drafted by the government using the $59 barrel as the average indicative price. The average indicative price in December 2025 is used to calculate the taxes payable in January 2026. Reporting by Darya Kosunskaya, Writing by Gleb Brynski, Editing by David Goodman
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Gold nears record of $4,600/oz before US inflation data
Gold prices were mostly stable near their peak on Tuesday. Supported?by fears over Russia's intensified attacks on Ukraine, and the situation in Iran. Investor caution before key inflation data restricted upside momentum. As of 1315 GMT spot gold was trading 0.2% higher, at $4,601.63 an ounce, after hitting a new record high of $4.629.94 the previous session. U.S. Gold Futures for February Delivery fell 0.1% to $4610.30. Investors' attention on the U.S. CPI data released later in the day and a modest recovery of the U.S. Dollar, fueled by hawkish remarks from a senior Fed Official, act as a headwind for gold, according to ActivTrades Analyst Ricardo Evangelista. John Williams, President of the Federal Reserve Bank of New york, said that there is no immediate pressure on the central bank to change its stance in monetary policy. Investors expect two interest rate cuts in 2019. Today's Consumer Price Index (CPI) data will provide more clues about monetary policy moving forward. The geopolitical front saw Russian forces launch the most intense missile attack on Ukraine this year early Tuesday morning, killing four and injuring many others. U.S. president Trump announced on Monday that any country doing business with Iran will be subject to a 25% tariff when trading with the United States. Non-yielding investments tend to perform well when interest rates are low and geopolitical risks or economic risks increase. "With gold prices consolidating over $4,500, supported by a negative outlook for the dollar - and ongoing geopolitical uncertainties, the $5,000 level appears to be within reach, and could even be tested during the first half of 'year," Evangelista said. CME Group, the U.S. exchange operator, announced on Monday it would change the way that it sets margins in precious metals. This is to ensure adequate coverage of collateral due to the current market volatility. Silver spot gained 2.3%, to 86.94 dollars per ounce after reaching a record-high of $87.16. After reaching a record high of $2,478.50 per ounce on December 29, spot platinum increased 0.4% to $2352.89 an ounce. Palladium rose 0.3%, to $1.847.25 an ounce. (Reporting and editing by Sharon Singleton in Bengaluru, and Louise Heavens.)
World Bank predicts resilient growth for the global economy in 2026, despite tariffs. However, fading dynamism is also predicted.
The World Bank warned on Tuesday that the global economy has been more resilient than anticipated, and 2026 GDP growth is expected to be slightly higher than forecasts made in June.
World Bank's Global Economic Prospects Report shows that the global output will grow at a slower pace this year, from 2.7% to 2.6% in 2025. It will then return to 2.7% by 2027.
The 2026 forecast GDP is two-tenths a point higher than the previous predictions made in June, and 2025 will see growth exceeding the previous forecast by four tenths a point. The World Bank said that two-thirds (or about a third) of the upward revision is due to the better-than expected growth in the U.S., despite tariffs-driven trade disruptions. The World Bank?predicts that U.S. growth in GDP will reach 2.2% by 2026, up from 2.1% in 2020, and two-tenths of a percentage point higher than the June forecasts.
The World Bank stated that after an early import surge in '2025 to beat tariffs held back U.S. economic growth, a larger tax incentive will help growth in '2026. This will offset the drag of tariffs, both on consumption and investment.
The global lender warned that if current projections hold true, the 2020s will be the slowest decade in global growth since 1960s. This is too low to avoid stagnation and unemployment?in developing and emerging markets.
Indermit Gil, World Bank chief economist, stated that "with each passing year the global economy is less capable of generating economic growth, and appears to be more resilient to policy uncertainties." "But economic dynamism and resilient cannot diverge long without fragmenting public finance and credit market."
The growth rate in emerging markets and developing countries?will be 4.0% by 2026, down from 4.2%. This is a decrease of?two tenths & three tenths respectively from June's forecasts. The World Bank stated that excluding China, this group's growth rate in 2026 will remain at 3.7%. This is unchanged from the previous year.
China's economy will grow at a slower rate of 4.4% by 2026, down from 4.9%. However, the forecasts have both increased four-tenths a percentage points since June because of fiscal stimulus and an increase in exports to markets outside the United States. (Reporting and editing by Paul Simao; David Lawder)
(source: Reuters)