Did the Dark Lord feel that even Gandalf the Grey was too much for him to deal with at the time or was he simply fleeing to cover up his identity?
The Tale of Years entry for TA 2063 describes Sauron's retreat from Dol Guldur as follows:
Gandalf goes to Dol Guldur. Sauron retreats and hides in the East. The Watchful Peace begins.
Earlier in Appendix A the Watchful Peace is described:
At first they had quiet, for those were the days of the Watchful Peace, during which Sauron withdrew before the power of the White Council and the Ringwraiths remained hidden in Morgul Vale.
It's obvious therefore that at this time Sauron wasn't powerful enough to resist the White Council.
To fully answer this you need to consult The Silmarillion, which is Tolkien's world history of Middle Earth. As @Darth Satan said, the White Council drove Sauron away, but the council was deadlocked on the issue (Saruman insisting on containment/observation) until Gandalf conclusively proved the Necromancer was Sauron in disguise.
At that time, the White Council fought Sauron, but he merely pretended to flee, and instead traveled to Mordor, where the Nazgûl had been prepping everything for Sauron.
Sauron, even though he was originally just a servant of The Great Enemy, was still more powerful than the Wizards, who themselves were servants of the Valar, The Creator's Designated Caretakers of Middle Earth. The inference is that the Istari were "3rd-tier" spirits, with the Valar and Melkor (The Great Enemy) being 1st-tier, and Sauron being 2nd-tier. So, the Wizards couldn't go one-on-one with Sauron, but they could greatly assist the elves, humans and dwarves in resisting. The High Elves, naturally, recognized the wizards for what they were, which is why Cirdan the Shipwright gave the Elven ring of Fire to Gandalf.
The White Council originally suspected 'The Necromancer' was in reality a ringwraith - a worrying enough fact if it had proven to be true. Gandalf had quite a hard time in the dungeons of Dol Guldur as it was, but Sauron nevertheless fled because he did not want his true identity to be revealed to The Wise at that point.