Support holds

Support for gold at its 50-day MA and the bottom of the pennant has held during the past week. A breakout from the pennant -- a chart pattern that usually heralds a continuation of the prior trend -- is imminent as the price approaches the apex of the triangle. For clues to the direction of the breakout, we note that RSI is rising again from support at 50, and MACD is poised to make a bullish crossover.

Silver has been rising this past week within a downward-sloping channel and managed to pop above the 50-day MA on Friday. The metal will need to overcome some resistance at the Fibonacci line at $14.70 in order to break out of the channel. RSI has risen above 50, and MACD is poised to make a bullish crossover, so the chances of a breakout by silver look good.

As tax-loss selling wound down for the year, GDX gapped up on strong volume on Friday after making a low on Tuesday a little above its 200-day MA. The gold-mining ETF faces significant resistance at $46, which it will have to overcome before attempting to surmount its 50-day MA, currently at $47.24.

The period from now through February -- and sometimes beyond, as in 2006 -- is seasonally strong for gold-mining stocks. However, RSI, while rising, is still below 50, and MACD, while on its way to attempting a bullish crossover, isn't quite there yet, so some work remains to be done.

On the weekly chart, GDX appears to have successfully tested support at the top of the channel from which it broke out in September. RSI may be bouncing off 50, but MACD recently made a bearish crossover at a high level, so the indicators are mixed for the moment.

The U.S. dollar index closed right on its downward-sloping trend line on Friday after making several attempts to rise above it during the week. Will the index overcome resistance here and head for the long-term support, now resistance, at around 80? RSI is flattening out near 70, and the MACD histogram may be starting to turn down, suggesting that the dollar could fall back from these levels -- which would support a bullish scenario for gold.