Cailian Press, July 16th (Editor Haotian Zhao) On Tuesday (July 16th), spot gold prices broke through the 2440 mark in early New York trading, with an intraday increase of nearly $20 and a highest reported price of $2443.39 per ounce, the highest level since May 20th when gold prices set a historical high of $2450.

Daily chart of spot gold.

At the same time, the U.S. dollar index remained stable at 104.23; the "anchor of global asset pricing," the yield on 10-year U.S. Treasury notes, fell nearly 6 basis points to 4.17%, while the 2-year U.S. bond yield, which is most closely associated with the Fed's interest rate expectations, fell nearly 4 basis points to 4.42%.

Ewa Manthey, a commodity strategist at ABN AMRO, said: "As more economic data supports the Fed's turn, optimism about a U.S. interest rate cut is supporting gold. In the current global geopolitical and macroeconomic environment, gold is expected to maintain its positive momentum and central bank demand is expected to grow."

Moody's, one of the world's three major rating agencies, released a report today stating that it expects the Federal Reserve to cut interest rates by 25 basis points at the end of the month's policy meeting. According to the schedule, the Federal Open Market Committee of the Federal Reserve is scheduled to hold a two-day meeting on July 30th and announce its decision on the 31st.

Currently, most market participants believe that the Fed's "first cut" will occur at the later September meeting. Moody's explained that lower-than-expected June CPI inflation data and a slowdown in the labor market have increased bets on the world's largest economy's impending interest rate cut.

Moody's added that the slowing pace of the U.S. labor market indicates that a tight monetary policy may harm growth. If the FOMC holds steady at its July meeting, it may lead to further softening of the labor market and even increase the probability of a 50 basis point cut at its September meeting.

Coincidentally, Jan Hatzius, chief economist at top investment bank Goldman Sachs, also said in a report released on Monday that the Federal Reserve should cut interest rates at its policy meeting to be held in July, rather than waiting until September.

"Based on the latest unemployment and inflation data, we estimate that the median of the Federal Reserve's monetary policy rule now implies a funds rate of 4%, well below actual rates of 5.25-5.50%," wrote Hatzius' team.

"Based on this observation, as well as encouraging June CPI figures and Powell's testimony to Congress last week, we expect the adjustment rate cut to begin soon."

At recent news conferences on monetary policy decisions, Federal Reserve Chairman Powell has been emphasizing that there is not yet enough confidence that inflation is sustainably returning to its 2 percent target. But at last week's congressional hearing, he deviated from his usual stance and signaled a dovish outlook.

At the Senate hearing, Powell said that too little or too late interest rate cuts could pose risks to the economy and labor market. In the House of Representatives, he also mentioned that the Federal Reserve has made considerable progress in combating inflation and does not need to wait for the inflation rate to fall to 2% before it starts cutting interest rates.

Yesterday, during an interview at a forum, Powell said, "We didn't get additional confidence in the first quarter, but in the second quarter, the three indicators, including last week's published data, did strengthen our confidence to some degree."

In addition to the Federal Reserve's dovish shift, Giovanni Staunovo, a commodity analyst at UBS, said that President Trump's election could have both positive and negative effects on gold. Staunovo said this could lead to "tax cuts, a shift in support for the stock market, and limits on faster rate cuts."