Dollar's rise capped for now

The U.S. dollar failed to follow through on last week's rally, encountering resistance at prior highs around 76.2. The index closed at 75.68 on Tuesday, more than a point below its 50-day MA, from which it parted company three months ago.

RSI has been repelled at the 50 mark, and the MACD histogram has flattened out, so the dollar appears to be ready to resume its decline after its brief, shallow bounce.

Moving inversely to the dollar, February gold bounced off support near its 50-day MA on Monday and retook the $800 level to close at $807.60 on Tuesday.

RSI has bounced off the 50 mark, and the MACD histogram is turning upward, but gold's broken uptrend line may offer resistance not far above.

The old resistance at $14 has again provided support for silver, as has its 50-day MA. RSI is peeking above 50, and the MACD histogram has begun to turn upward.

GDX appears to be trapped between support around $46 and its 50-day MA above, currently at $47.24. A breakout from this range could result in a significant move. RSI, which continues to hover around 50, offers no clues to the direction of that move, nor does the MACD histogram, which is essentially flat.

A couple of Canadian portfolio managers have been banging the drum for the junior gold miners, which they see as cheap. Sprott Asset Management's John Embry told The Gold Report:

now I think the gold, the junior golds in particular, are pretty well sold out. I think most of the people who were sort of “weak handsers,” as I would call them, probably have discarded them. The vast majority of people who have owned these things own them because they know why they own them.

And so, I think it’s much less likely [that the junior golds will be thrown out with the other stocks in a general market meltdown]. There will be some general weakness, but nothing like we experienced in August. My goodness! That was awful.

And Otto Spork, who manages the Sextant Strategic Opportunities Hedge Fund, is quoted in the Globe and Mail as saying:

"We are looking to buy on this weakness. We feel that certainly the junior gold and other resource stocks are nowhere reflecting their true value."

Spork says he expects gold to reach US$1,500 -- and silver, $35 to $40 an ounce -- within the next two years.