Gold Price Analysis: XAUUSD struggles to register any recovery, hangs near YTD low

• Gold Price struggled to capitalize on the modest intraday bounce from a fresh YTD low.
• Recession fears and the risk-off mood continued lending some support to the commodity.
• An extension of the recent strong USD bullish run acted as a headwind for the XAUUSD.

Gold Price reversed an intraday dip to its lowest level since August 2021, albeit seemed to struggle to capitalize on the attempted recovery move. The XAUUSD seesawed between tepid gains/minor losses through the early European session and now seems to have stabilized around the $1,735 region.

An extended selloff across the equity markets - amid persistent fears about a possible global recession - turned out to be a key factor that offered some support to the safe-haven precious metal. That said, the relentless US dollar buying, bolstered by hawkish Fed expectations, acted as a headwind and kept a lid on any meaningful upside for the dollar-denominated gold.

In fact, the USD Index soared to a fresh two-decade high and continued drawing support from growing acceptance that the Fed would retain its aggressive policy tightening path to curb soaring inflation. The bets were further reaffirmed by the FOMC meeting minutes released last week, indicating that another 50 or 75 bps rate hike is likely at the upcoming FOMC meeting in July.

Policymakers also emphasized the need to fight inflation even if it results in an economic slowdown. Hence, the market focus will remain glued to the latest US consumer inflation figures, due for release on Wednesday. The US CPI report will play a key role in influencing the Fed's policy outlook and help determine the next leg of a directional move for the non-yielding gold.

In the meantime, the worsening global economic outlook and a further decline in the US Treasury bond yields - led by the flight to safety - might continue to lend some support to the gold price. Apart from this, the USD price dynamics would be looked upon for short-term trading opportunities amid absent relevant market-moving economic releases from the US.

Technical levels to watch