Gold was slightly lower from Hong Kong to the New York open on Wednesday, then declined sharply to near the noon hour, bottoming at $884, traded sideways through the Comex, but then got a rocket launch during the first hour of Globex trading, shot skyward by more than $50 in two hours, and finished the wild day’s ride at $941.50/oz., up $26.60. Overnight, gold has backed off.

Platinum declined through the Comex, to as low as $1030, then it too got a boost, climbing back to end at $1058/oz., up $13. Overnight, platinum is little changed.

Silver followed the same path, dipping to $11.90, then soared by nearly a buck to close at $12.89/oz., up 20 cents. Overnight, silver has edged lower. (Click here for charts)

After several days of listless trading, with a slight bias to the downside, the precious metals rode the rollercoaster in some very manic action yesterday.

Although rising equities and oil chipped in to help, it was the Federal Reserve that made the real difference. Gold and the other precious metals were resigned to another down day until the Fed announced it would purchase long-term Treasuries. That sent the dollar reeling and gold into orbit.

The Hightower Report chronicled the tale of two days: “Trading in gold turned extremely volatile on Wednesday with the market initially being pushed sharply lower on what the press called rising investor risk tolerance and that in turn seemingly prompted long liquidation and some chart based selling. Recent economic reports including today’s CPI and yesterday’s housing data also seemed to be fomenting some economic optimism that in turn diminished gold’s safe haven appeal. In fact, reports of rising scrap gold supplies and slack jewelry demand in India may have added to the early selling bias. However, the gold market was obviously inspired by the aggressive action from the FOMC meeting, which in turn seemed to shift the gold market from a flight to quality focused market to an inflation focused market. While the inflation angle might not stick a sharp slide in the Dollar in the wake of the FOMC meeting could have been a totally fresh bullish force for the gold trade on Wednesday afternoon.”

“Nobody anticipated the Fed would monetize debt,” said Leonard Kaplan, of Prospector Asset Management in Evanston, Illinois. “This is highly inflationary.”

To say the least. Whether this is the stimulus gold has needed to push it back over $1,000 remains to be seen, but yesterday may well have marked a major turning point, as the inflation genie is out of the bottle now.

As Jim Sinclair, writing on jsmineset.com, exclaimed: “Mugabe is the Chairman of the Federal Reserve. What a horrible mistake this is! Now you can count on Confetti Money.”

Nothing could be more gold bullish.

Source: Lift-Off!