WEAKER DOLLAR BOOSTS GOLD -- NEWMONT LEADS MINERS HIGHER -- CANADIAN DOLLAR HITS 52-WEEK HIGH AND IS STRONGEST CURRENCY

BOUNCE IN EURO WEAKENS DOLLAR ... Chart 1 shows the U.S. Dollar Index continuing the pullback that started nearly a month ago. A lot of the recent selling is the result of a bounce in Euro as shown in Chart 2. Although no major trend reversals have taken place, the weaker greenback is giving a boost to commodities, and gold in particular.

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Chart 2

GOLD RALLIES -- NEWMONT LEADS MINERS HIGHER ... A few weeks back, we showed gold breaking a three-month down trendline (orange line). The ability of GLD to then bounce off that line was also encouraging. The green line on Chart 3 now resembles a bullish "neckline" drawn over the January/March highs. Gold is rallying sharply today and appears headed for a test of that neckline. A close over 112 (which appears likely) would be another bullish vote for the price of bullion (and other precious metals). Gold stocks have been lagging behind bullion but also look promising. Chart 4 shows the Market Vectors Gold Miners ETF (GDX) having broken a resistance line as well. The standout performer in the GDX is Newmont Mining which also happens to be the heaviest GDX holding. Chart 5 shows NEM trying to climb above its January high near 51.

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CANADIAN DOLLAR LEADS COMMODITY CURRENCIES HIGHER... Two weeks ago (Tuesday, March 2), I wrote about the upturn in gold and gold stocks (led by Newmont Mining). I suggested that the upturn in gold hinted that that the dollar rally was on thin ice. Part of that reasoning was based on the upturn in commodity-based currencies like the Brazilian Real, the Aussie, and Canadian Dollars. I suggested that their upturn foreshadowed dollar weakness. The next three charts show those three foreign currencies nearing tests of their 2010 highs. The standout performer is the Canadian Dollar. Chart 8 shows the Canadian Dollar Currency iShares (FXC) breaking out to a new recovery high. That's where foreign currency leadership is coming from.

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