Gold gained traction on Wednesday

That said, the attempted recovery move runs the risk of fizzling out rather quickly and remains capped amid expectations for a more aggressive policy tightening by the Fed.

Investors now seem convinced that the US central bank would tighten its monetary policy at a faster pace to combat stubbornly high inflation, which surged to a four-decade high in May. In fact, Fed fund futures indicate rising odds of a 75 bps rate hike at the conclusion of a two-day FOMC meeting on Wednesday and another 75 bps hike in July. This should act as a tailwind for the US bond yields and the USD, which, in turn, might cap gains for the non-yielding gold. Hence, the focus remains glued to the outcome of a two-day FOMC monetary policy meeting, due later during the US session. A 75 bps Fed rate hike move would be the biggest since 1994 and send shockwaves across asset classes, boosting the USD and lending some support to gold prices. In the meantime, traders might take cues from the US monthly Retail Sales figures, though any immediate market reaction is more likely to be short-lived.