Danns, who has refused a contract extension and has been linked with a summer move to Hull, struck after just two minutes to leave Palace six points clear of the drop zone with two games to play.
Leeds, meanwhile, are left counting the cost of their recent poor form - and are now relying on teams above them slipping up if they are to get back into play-off contention.
But Grayson is refusing to give up hope. "We want to turn a good season into a great season," he said. "The next two games are both winnable. We still have a fighting chance and football has a funny way of being unpredictable.
"It is out of our hands now, where a few weeks ago it was down to us. We have not had the breaks and it showed again today. If it doesn't happen this year then we will come back again and try next year."