Platinum pushed as high as $2230 in Hong Kong, but sank through to New York, then traded sideways to end at $2164/oz., down $37. Overnight, platinum has been flat.

While silver was lower to the mid-point of the London session, it rallied from there, making its way nearly back to the break-even point, and closing at $17.96/oz., down just 2 cents. Overnight, silver has been trending higher.
(Click here for charts)

As might have been expected, there was profit-taking in the precious metals yesterday after their recent runup.

But the damage wasn’t large, especially considering that the usual market movers, oil and the dollar, both went against them, with the former backing off and the latter staging a modest rally.

In fact, some analysts were making the case that both the dollar’s rise and gold’s fall were technical in nature.

Technician Zachary Oxman, of Wisdom Financial, believes that, “Until we cross and close above the $940 level, we’ll remain range-bound between $900 and $940.”

Nick Ruggiero, a trader at Eagle Futures Inc. in New York, noted gold’s recent link to oil and said, “You’ve got to be cautious because when you do get a big sell-off in oil, all commodities are going to get hit hard.”

And how much does the paper gold market influence the metal’s price? Plenty, contends Jim Sinclair of jsmineset.com.

“It would be bullish to shut down the US market for gold,” Sinclair writes, “because then you would have a thin market with a positive Euro bent on gold and a more positive global market would be created.

“No access for major traders will be denied, that you can be sure of. I would love to see US trading stopped in paper gold. That would be good for $150 on the upside after less than 24 hours. The poor COT would not be able to create the influence on the global market they do with the aid of the US paper market cabal.”

Source: Gold Corrects, Following Oil

Overnight, gold has continued upward.

Platinum took off in Europe and never quit, rising steadily to end barely off its intraday high at $2021/oz., up $60. Overnight, platinum is sharply higher.

Silver was up sharply following its bottom below $16.50 in Hong Kong, moving steadily higher and easing only in the afternoon to close at $16.80, up 20 cents. Overnight, silver is trending higher.
(Click here for charts)

It was a welcome day for metals fanciers, as the objects of their affection fought off the negative effects of a strengthening dollar and rode the rising oil tide higher.

Despite recent dollar strength, “I am seeing [it] catch a new wave of selling, which [will] push gold higher,” said Zachary Oxman, of Wisdom Financial. “I also think we can’t discount the strong moves in crude and their staying power so far.”

Indeed, the oil bull run has persisted in the face of deteriorating fundamentals, and the longer it continues, the higher it will push inflation. Which, needless to say, is gold-positive.

The oil moon shot has another effect, as well. “Gold is undervalued,” said Nick Ruggiero, a trader at Eagle Futures in New York, in that it “is cheaper to buy than crude right now.”

Also, despite some early returns that were downbeat, the “Akshaya Tritiya celebration in India should see physical buying and provide background support,” wrote James Moore, of TheBullionDesk.com.

However, Moore doesn’t believe it’s time to break out the noisemakers as yet. From a technical viewpoint, he says, gold appears to be capped by a downtrend-line resistance around $879.50, which is preventing the metal from making a move to retake the $900/ounce level. Since gold did break through that resistance level yesterday, then presumably we’re on our way to $900.

Meanwhile, streetTRACKS Gold Trust backed yesterday’s action by elevating the amount of bullion it holds in its vaults by 1%. The fund was forced to sell 9.6% of its stockpile in April.

A final word from steadfast gold pessimist Dennis Gartman, editor of the Gartman Letter. He asks what will happen to gold “when crude oil does eventually top out and head lower?” And answers the question by saying, “The trend for gold remains down.”

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.
(Click here for charts)

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.”