The steep plunge in precious metals prices overnight was almost predestined. They had run up too hard and too far, and some of the factors behind the surge suddenly had a question mark next to them.

The simplest explanation for the biggest one-day fall in the gold price in more than a decade, and similarly hefty drops in silver and platinum prices, is profit-taking. After soaring more than 60 per cent this year, the precious metal was overdue some level of correction.

Gold had the biggest price slump in more than a decade overnight.Credit: Bloomberg

Indications of how overheated the gold price had become were the queues of punters lining up at gold exchanges to buy into the boom, while others rushed to sell unwanted jewellery to cash out while the price remained at stratospheric levels. Those were signals to professional investors that the market was nearing breaking point.

The catalyst for the plunge – the spot price of gold was down more than 6 per cent at one point, and silver more than 7 per cent – may have been a modest appreciation in the US dollar, which rose 0.4 per cent against the basket of America’s major trading partners.

Precious metals are priced in US dollars, which have depreciated about 11 per cent on a trade-weighted basis this year. That big slide made it cheaper for foreign investors to acquire gold and other commodities. Conversely, any rise in the dollar makes it more expensive.

The US dollar has been tumbling this year, largely for Donald Trump-related reasons.

Gold may have given back what is really just a modest portion of the gains it has experienced this year, but it hasn’t lost its lustre.

His trade wars, the peculiar nature of his cabinet and the decisions it has made, the big shifts in America’s relationships with the rest of the world, the question marks they have raised over the strength of the rule of law, the dysfunction in Congress, the blowout in the US deficits and debt caused by

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