Wales are winless since the pool stages of last year's World Cup after the retirement of a host of big name players and with others out injured.
Despite crashing 36-28 to Australia on Saturday night, on the back of a 25-16 loss a week earlier, the New Zealander said he was optimistic they would soon turn the corner.
"I'm confident this is going to be a good team," he said.
"I can see signs out there that we're in games, we're pressurising teams and quality opposition players. I hope you can see that as well.
"We're just hurting ourselves at the moment. Sometimes not by the pressure the opposition are putting us under, but some of our turnovers and mistakes are allowing easy ins to the opposition team.
"You fix those things up and you keep working hard to be accurate."
Gatland pointed to their excellent maul in Melbourne, which helped skipper Dewi Lake bag two tries.
But he said they were "a bit naive" in other areas and not accurate enough.
Wales have slumped to 11th in the world rankings under Gatland, below Fiji and Italy, but he insisted his motivation remained high with one more tour match to go, against the Queensland Reds in Brisbane on Friday.
"Yeah, absolutely. I'm really excited by this group," he said when asked if he still had the hunger.
"We did say all along and have been clear that we probably need to go through a little bit of pain. We're in that process of players getting some more experience.
"Our whole planning was to pick a group of youngsters after the experience we lost from the World Cup to develop through to the World Cup in 2027 in Australia."
Cohesion
Like Wales, Australia are re-building under new coach Joe Schmidt after failing to make the quarter-finals of the World Cup for the first time, when Eddie Jones was in charge.
Despite overseeing two-wins-from-two, Schmidt said the Wallabies still had work to do after letting a 17-0 lead slide in Melbourne and a 13-0 advantage slip in Sydney.
They meet Georgia, who stunned Jones' Japan 25-23 in Sendai on Saturday, in Sydney next weekend.
Schmidt forecast several changes as he continues to balance consistency with giving players a chance.
"We made five changes this week (to the 23) and there could be that many again," he said.
"You're trying to build cohesion and it's a little bit of a more difficult equilibrium that you're trying to find between the continuation of confidence and then offering opportunity.
"We're trying to build a real squad mentality and have confidence in the players across the board."
Newly-appointed captain Liam Wright could return from injury after missing Melbourne with the likes of Len Ikitau, Tom Lynagh and Harry Wilson also racing the clock to be fit.
