Gold Price Forecast: XAU/USD bears are moving in to fade the rally

• Gold price bears are moving in to fade the Tuesday rally. 
• US Dollar was momentarily knocked off its perch on softer data. 
• Federal Reserve sentiment keeps the US Dollar afloat and Gold price weighed. 

The Gold price stabilised at the end of the day and is up 0.5% near $1,826.67 after travelling from a low of $1,804 and $1,831 on the day. Weakness in the US economic data was widespread and weighed on the greenback that had otherwise been resurging on the back of prior inflationary readings.

Gold price rallies on poor United States of America data readings

Among the US data on Tuesday, Gold price rallied on the back of a survey of Consumer Confidence showed a decline to a three-month low of 102.9 in February. The Chicago Business Barometer, also known as the Chicago PMI, dropped to 43.6 in February from 44.3 in the prior month, according to a report from ISM-Chicago and MNI. The S&P CoreLogic Case-Shiller 20-city Home Price Index also dropped 0.5% in December.

Looking ahead, the Gold price could now be affected by the ISM manufacturing PMI which should continue reflecting the fragility of the sector in February (market f/c: 45.5); the final estimate to the S&P Global manufacturing PMI will likely confirm this too, analysts at Westpac said. ''Meanwhile, construction spending is expected to remain subdued in January given softening demand (market f/c: 0.2%). Minneapolis Federal Reserve president Neel Kashkari is also due to speak.''

Federal Reserve sentiment reigns 

However, the US rate futures have priced in a peak fed funds rate of 5.4% hitting in September. The market has all but priced out Federal Reserve rate cuts this year. Consequently, the US Dollar index, DXY, which measures the currency against a basket of major currencies, managed to claw back by some  0.18% in late morning trade on Wall Street and was set for a February gain of over 2.5%, its first monthly increase since September. The Federal Reserve sentiment is keeping the greenback in the hands of the bulls as marked price in the notion that the central bank will have to raise interest rates more than initially expected.

Gold technical analysis

As per the prior Gold price analysis, Gold price rallied as follows: 

Gold prior analysis

The prior Gold price analysis said ''the double bottom near the $1,800 psychological Gold price level is offering a compelling case for a move towards the $1,830s, a touch above the January opening lows. However, a retest of the W-formation's neckline could be on the cards first.''

Gold price update

As illustrated, the Gold price burst higher after the correction and offered bulls an opportunity in late European and US markets to the target area.  At this juncture, a correction is underway and bears can look to the lower time frame structure for a fading set-up:

Gold price H1 and M5 charts

The hourly topping pattern is in play and the price imbalances below it are compelling for a move back into old resistance down the Fibonacci scale towards $1,820. 

The Gold price 5-min chart shows a structure near $1,826 that needs to give out in order for there to be prospects of a move to the target area.