• Gold price attracts some buyers during the Asian session, albeit lacks follow-through.
• Bets for more rate hikes by the Federal Reserve underpin the US Dollar and cap gains.
• Traders now look forward to Fed Chair Jerome Powell’s comments for a fresh impetus.

Gold price edges higher during the Asian session on Wednesday and recovers a part of the previous day's losses, though the intraday uptick lacks bullish conviction. The XAU/USD currently trades around the $1,915 region and remains well within the striking distance of its lowest level since March 16 touched last Friday.

Worsening US-China relations lend support to Gold price

The Wall Street Journal reported on Tuesday that the United States (US) is considering new restrictions on exports of artificial intelligence chips to China. This points to a further deterioration in relations between the world's two largest economies, which, to a larger extent, overshadows the latest optimism over China’s economic prospects and lends some support to the safe-haven Gold price. In fact, China's Premier Li Qiang, during the keynote speech on Tuesday at the World Economic Forum in Tianjin, said that economic growth in the second quarter will be higher than the first and is expected to reach the annual projected target of around 5%.

Federal Reserve’s hawkish outlook caps gains for XAU/USD

The upside for Gold price, however, remains capped in the wake of the Federal Reserve's (Fed) hawkish outlook, signalling that borrowing costs may still need to rise as much as 50 bps by the end of this year. Furthermore, Fed Chair Jerome Powell said last week that the US central bank doesn't see rate cuts happening any time soon and will wait until it is confident that inflation is moving down to the 2% target. This, along with the upbeat US macro data released on Tuesday, helps the US Dollar (USD) to regain positive traction and keeps a lid on any meaningful upside for the non-yielding Gold price, warranting some caution for bullish traders.

The US Census Bureau reported on Tuesday that Durable Goods Orders in the US rose for the third month in a row and jumped 1.7% in May, smashing consensus estimates for a decrease of 1%. Adding to this, the Conference Board's Consumer Confidence Index climbed to 109.7 in June - the highest since January 2022 - from 102.5 in the prior month. Additional data showed that sales of new single‐family houses rose 12.2% in May and indicated that indicated the US housing market has been able to weather rising interest rates. This reaffirms expectations that the Fed will likely continue raising interest rates to slow demand in the overall economy.

Focus remains on Fed Chair Jerome Powell’s appearance on Wednesday

Hence, the market focus will remain glued to Fed Chair Jerome Powell's appearance at the ECB Forum on Central Banking in Sintra later this Wednesday. Investors will look for clues about the Fed's future rate-hike path, which will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the US Dollar-denominated Gold price. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the XAU/USD is to the downside and any meaningful intraday positive move is more likely to attract fresh sellers, rather runs the risk of fizzling out quickly