Platinum also took a pounding, just coming off its intraday low to end at $1865/oz., down $68. Overnight, platinum has edged lower.

Silver’s decline was even sharper than gold’s, but it did bounce off the $16 mark and rebound up to close at $16.15, down 69 cents. Overnight, silver is trending higher.
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The bloodletting in the precious metals continued with a vengeance yesterday, but with gold finding support at $850 and silver at $16, is the worst over? It’s way too soon to tell, as yet.

One thing for certain is that this is entirely counterintuitive. The Federal Reserve’s quarter-point cut on Wednesday is inflationary, without question, which should be gold-positive. But traders seem to be grasping at the straw that the Fed may be done, based on little evidence.

If this is indeed the end of this round of interest rate reductions, then that could be seen as very slightly dollar- and equity-positive. But not to the extent we saw yesterday, with stocks booming and the buck strong.

The truth of the matter, though, is that the Fed wouldn’t have acted if it felt that the economy had been given enough of a cash infusion to perk it up. And it is also true that serious inflation is baked into the cake.

That the market can ignore those important factors in favor of a wispy hope that things maybe, possibly, might not be quite as bad as they seem is a good indication of just how daffy this market is.

Whatever, “gold will remain at risk to further corrections in the coming sessions,” wrote James Moore, of TheBullionDesk.com.

Perennial pessimist Jon Nadler of Kitco goes farther, saying that, “Despite the lack of a clear pause signal in yesterday’s Fed announcement, the markets are treating May/June as the pivot point beyond which they can no longer reliably depend on ever cheaper dollars to fuel speculative binges in commodities.”

But what then will they spend those eroding dollars on?