Gold Price Forecast: XAUUSD surrenders intraday gains amid modest USD strength

• Gold price struggles to preserve its modest intraday gains amid the emergence of some USD buying.
• The prospects for a more aggressive major central banks also acted as a headwind for the metal.
• The downside seems limited ahead of this week’s key US macro releases and the FOMC decision.

Gold price attracted some selling near the $1,728 region on Tuesday and retreated to the lower end of its daily range during the first half of the European session. The XAUUSD was last seen trading just below the $1,720 level, nearly unchanged for the day.

The US dollar staged a goodish rebound from the vicinity of its lowest level since July 5 touched the previous day, which, in turn, acted as a headwind for the dollar-denominated gold. This, along with the prospects for a more aggressive move by major central banks to curb soaring inflation, was seen as another factor weighing on the non-yielding yellow metal.

That said, growing fears about a possible global recession continue weighing on investors' sentiment and offer some support to the safe-haven gold. The flight to safety is triggering a fresh leg down in the US Treasury bond yields, which could keep a lid on any meaningful gains for the greenback and help limit losses for the precious metal, at least for the time being.

Investors might also be reluctant to place aggressive bets ahead of the heavyweight US macro data and the key central bank event risk. A rather busy week kicks off with the release of the Conference Board's US Consumer Confidence Index on Tuesday. The focus, however, will remain on the outcome of a two-day FOMC meeting, scheduled to be announced on Wednesday.

The US central bank is widely expected to hike interest rates by 75 bps and leave the door open for further hikes. The outlook, along with Fed Chair Jerome Powell's remarks, will influence the USD price dynamics. This week's US economic docket also highlights the release of Durable Goods Orders data on Wednesday and the Advance Q2 GDP report on Thursday.

Apart from this, traders will take cues from the US Personal Consumption Expenditures (PCE report) - the Fed's preferred inflation gauge - scheduled for release on Friday. This, in turn, will play a key role in driving gold price in the near term and help investors to determine the next leg of a directional move.

Technical levels to watch