USA borrowing $1.2 billion a day, thanks to George Bush:
Gold Hits 16-Year High in Asia As Dollar Weakens
00:37 EST Monday, Nov 08, 2004
By Lewa Pardomuan
SINGAPORE (Reuters) - Gold climbed to a 16-year high in Asia on Monday after the dollar dropped to a record low against the euro, attracting buyers to the precious metal willing to pay in currencies other than the dollar.
Spot gold rose to $435.00/$435.75 an ounce by 0408 GMT, the highest since August 1988, from $433.25/$434.00 in New York on Friday.
Dealers said $440 an ounce, last traded in July 1988, would be the market's next price target.
However, they said gold's upside potential could be capped by profit taking. Dealers said the latest price rise had already attracted selling of scrap gold.
The re-election of President George W. Bush for a second term in the White House did little to change investor sentiment toward the dollar, which is under pressure on concerns over the the U.S. budget deficit and ballooning current account deficit.
"Concerns over the Bush administration's economic and foreign policy continue to weigh on the dollar and buoy precious metals," said N M Rothschild in a report.
Gold has gained nearly 60 percent since Bush was elected president in 2000.
The euro rose to a record high around $1.2975 in early Tokyo trade on the worries about the twin U.S. deficits.It was trading at $1.2966 at 0454 GMT.
In Tokyo, benchmark October gold futures rose 12 yen per gram to 1,476 yen, tracking gains in New York's COMEX futures.
Beh Hsia Wah, a dealer at United Overseas Bank in Singapore, said selling of physical gold would limit the upside and the market was eager to see if the yellow metal was able to breach $440 an ounce.
"There's no buying in the physical market. I see more of scrap gold sell-back," she said.
Some dealers said gold could trade up to $465 an ounce, a level also seen in 1988, provided the price holds above $434 an ounce.
Dealers said they would monitor Wednesday's meeting of the U.S. Federal Reserve's policy-making committee, which is widely expected to raise short-term interest rates by 25 basis points.
"Higher interest rates should favor the dollar. However, with sentiment strongly against the dollar, it will take more than a 25-point interest rate rise to alter the market's view," said Rothschild.
The U.S. budget deficit is about $427 billion, or 3.7 percent of gross domestic product, while the current account, the broadest trade measure, hit a record gap of $166.18 billion in the second quarter.
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