Gold sank pre-Fed, falling as low as $862 in London trading, then seesawed through the New York session on Wednesday, before shooting upward in the Globex market after the interest rate announcement and finishing at $876.60, up $5.50. Overnight, gold has fallen off.

Platinum traded up and down through a $20 range before settling in the afternoon at $1933/oz., up $7. Overnight, platinum is sharply lower.

Silver closely tracked gold, but soared even higher after the Fed decision, closing at $16.84, up 32 cents. Overnight, silver is trending lower.
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Metals investors apparently believed the Fed might hold interest rates steady, or indicate that a rate cut yesterday would be the last, and prices suffered accordingly. When neither happened, gold and silver were off to the races, leading many to suspect that the pre-Fed lows might represent something of a bottom.

Gold was certainly held back pre-Fed by a dollar that held up, and by easing oil prices, but nothing could restrain it after the decision.

As we have been saying, a Fed rate cut, and the lack of any firm indication that the FOMC will now be turning its attention to inflation, are dollar negative and thus gold positive. That doesn’t mean the market will necessarily respond in the way that it “ought to,” but in this case it did.

For now. We shall have to see if this is the beginning of a prolonged uptrend for the precious metals, as it should be.

“We did not get the impression that today’s statement signaled a pause, albeit expectations now show a 75% chance of no cut, come June,” said Kitco’s Jon Nadler.

“The Fed refused to close the doors on any policy options as it tries to ensure that the economy is first revived,” Nadler added.

Zachary Oxman of Wisdom Financial concurred, saying that, “The [Fed] statement was very economic neutral and still seemed to focus on the risk of inflation … I’d watch for dollar weakness and gold strength off this report today.”