Wolves fell behind to fellow strugglers City but rallied in the second half to secure three valuable points with a 2-1 win.
Saunders revealed that he had some strong words with his side when they were a goal down at the break, but the reaction of the players left him all smiles after the game.
"I thought everything was going wrong. We looked lacking in confidence, we weren't sharp around the box. We weren't reacting to things and when the goal went in it was a calamity goal, and I am thinking 'I can't believe that has just happened'. Carl has given David the ball, he just has to put the ball away from the goal. But he gives it back to Carl and he has to get something behind it but it has gone in, and then within minutes we lose Bakary Sako and David Edwards to injury," said Saunders.
"Our finishing wasn't sharp and, to be honest, I went in at half-time and had a go at everyone. I wanted some sort of reaction from them and I have to say that the character of the players has stood out yet again. Instead of laying down and dying they have come back and won the game. It was a big win.
"You have to keep your belief and you have to have the strength of character when the chips are down. So I am pleased the players kept going. At every big club the supporters demand a performance, and you can't play for a big club unless you can play in adversity. Most of the time you are in adversity. You have to turn the game around and that is why you get the big wages."
The result leaves Wolves 23rd in the Championship table, one point off safety and three points ahead of bottom-placed Bristol City.